Binos,
Sorry to hear you are still having trouble. As there are two disks, are you installing 10.3 or 10.4? As I remember, 10.4 came on a single DVD.
If the Mac will let you, do another "Archive and Install". As there are two disks, it might be worth trying to avoid having to use the second one by clicking the "Customize" button on one of the installer pages. De-select anything you don't want. One of the longest parts of the Mac OS installation is the different language sets. If you just install the English one, it will take less time and may be more successful.
If you are using the original installer disks which came with your iMac, it may well be trying to install all the applications which originally came with the Mac. Again, use the "Customize" button to avoid installing all those apps again.
Good luck (and fingers crossed for you!),
AppleMacster