Thanks for all the replies.
Firstly I tested running the machine with the generic uni-processor kernel which ran over night (which it couldn't do MP). This explains why the install went smoothly when I changed the HDD, but not once I had setup and booted with a MP kernel.
It's curious that a Fujitsu drive (model MAJ3182MC) causes what looks like the same hang using either SMP or uni-processor kernel. It will hang during the install process. A timing issue in the esp driver perhaps?
to answer a few questions, I tried the kernels on the iso, and some I built from 7.1 sources ( downloaded from the ftp, are those quite old?). I haven't tried current yet, but that sounds like a very good idea, so I will try that, it'll take a few days and I'll let you know how it goes. Fingers crossed it may also make the fujitsu drives usable as well.
The hang itself seem like it would probably be during an interrupt at a guess, the system doesn't respond to <stop> A, but additionally even toggling the capslock/numlock lights stops working. I'd say that means the debugger would be unlikely to work. I'm only guessing from how the machine behaves.
when I ran 4 ages ago I did use the SMP kernel, and it worked very well. I had it running a very basic website, SVN and openvpn mostly.