BRAND NEW Mac Pro won't boot from Leopard DVD, kernel panics!

I just received my brand new Mac Pro today. It's a BTO machine with the upgrade to the NVIDIA 8800GT, a second optical drive and a Mac OS X Server license. The system has Mac OS X server installed on the default 320GB drive. I decided to use the server license as a virtual machine running in Leopard client. So, I installed 2 new 500GB Seagate 7200.11 (Retail) drives in the machine, zeroed them out in prep for installing Leopard client.
At this point, I pop in a freshly-purchased retail copy of the Leopard DVD and restart. When I try to boot from the DVD and install Leopard to one of the new Seagate drives, I get kernel panics - need to restart the machine. Also tried booting from the Mac OS X Server DVD and this too only caused kernel panics. The DVD's read perfectly from within Mac OS X Server and boot from hard disks is flawless.
I spent an hour on the phone with a level 2 tech at Apple - Tried swapping out the RAM and moving around the DIMMS to no avail. I am at a loss to what this could be. Seems to be a hardware issue and the tech thought it was likely a problem with one of the memory risers but couldn't send replacements. Anyone else with a similar issue?
This is my first Mac and it looks like this Mac Pro is going back for an exchange and I'll have to wait yet another 10-12 days for a replacement to arrive. Bummer.
Am I missing something simple here? Does this seem to be a hardware issue?
If anyone has any ideas before I ship this one back, please write!!!

New Mac Pros will not install the Leopard retail disc. They will only install the Leopard disc which shipped with them labeled Mac Pro. That has always been true. Macs can only boot the system that ships on DVD in the box that came with them, and newer retail releases. They can never boot from an older retail release than what shipped in the box.

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