Binos,
Did you try booting up in "Safe Mode"? Hold down the Shift Key whilst it's starting up.
Does the Mac try to boot up from the installation disk? If not, hold down "C" whilst it starts up. This will force it to try and start from the CD. Do and "Archive and Install" *not* an "Erase and Install".
Someone has posted a similar problem on the Apple discussion forum. It's a bit techy –*but might work:
Booting to Darwin/BSD Screen
Good luck,
AppleMacster