No Boot on 12" PowerBook from factory disk

I thought there was a problem with hard drive after computer would not boot from hard drive or OSX install cd. replaced hard drive and am still having this problem, "The Computer will give the happy boot chime then it will start to boot on the hard drive but the monitor has grey lines in it. The computer will keep acting like it is booting but never completely boot. It just has the circle go around and around on the monitor with the lines in it."

booted in verbose mode and the last lines read:

Wed Jan 8 19:14:49 PST 2003; root: xnu/xnu-344.16.8.obj~5/RELEASE_ PPC

panic: We are hanging here...

any ideas? thank you