I've just gone through the same thing with my B&W G3 350. I could install OS9 no problem, and Jaguar would install with a bit of fussing, but it would not boot from any Panther install CD. (yes, even originals - I do have some
)
Anyway, I read this thread a while ago since I was having the same trouble, and kind of dismissed Luca's first comment since I thought my drive was fine. It ended up crashing and burning badly yesterday and is now sitting in my garbage can. With a new HD in it, I installed Panther perfectly, and I'm posting from the machine right now, totally problem-free. Something to consider.
It's actually a decent machine, even if the specs sound 10 years old.