IMac gray screen (with frozen "spinning gear") during startup

Hello all - my first post to the community, so be gentle....
I'm having a boot issue with my early 2008 Intel based iMac.  After a recent power outage, I can't get the machine to boot to OSX - the spinning gear spins for about a minute then freezes.  When I boot to Snow Leopard install CD, it gets to the same point then displays a Kernel Crash screen. I can boot to Windows using the option key on startup, but Windows runds a little weird...mostly graphic display errors (dragging windows and scrolling in web browser is slow and jumpy, games crash with strange graphics displayed).  I suspect a graphics card malfunction (the machine has an NVidia GeForce 8800GS), but I'm not convinced and I can't figure out how to test it. Here's more info:
- I'm running OSX version 10.6 with a Boot Camp XP partition.
- I've disconnected all peripherals except keyboard and mouse (including Ethernet)
- I've reset NVRAM/PRAM
- Safe boot, Single-user mode won't boot
- I haven't pulled and reset any RAM modules yet.
Any thoughts would be appreciated - I'm three hours from the nearest Genius Bar, so I'd like to try as much at-home troubleshooting as possible.

http://support.apple.com/kb/TS2570 Mac OS X: Gray screen appears during startup
When I boot to Snow Leopard install CD, it gets to the same point then displays a Kernel Crash screen.
OS X: About kernel panics
User Tip:  Kernel Panics? Don't panic too!
How to troubleshoot a kernel panic
I'm running OSX version 10.6
Use Software Update or the OS 10.6.8 combo update to update your OS.  Also, update everything SU has to offer for your computer.  When done, repair permissions and restart your computer.
I'm three hours from the nearest Genius Bar
Apple Stores are not the only places that repair Macs.  There may be an AASP that is closer.
International AASP’s & Other Services
AASP's Outside of the USA
so be gentle....
As opposed to....

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