Macbook Pro stuck in restart loop with fresh install

Hello!
I have a Macbook Pro (Mid 2009) that I have been running Snow Leopard on up until now. I had been meaning to upgrade to Mavericks for a while, but had just never gotten around to it. Over the last month or so, my Macbook has been running really slow, hanging on the spinning beachball every few minutes for a few seconds (sometimes up to a minute or so). So I figured a clean start might be the best way to go, and while I'm at it, I might as well upgrade to Mavericks.
I backed up all my data, and then I created a Mountain Lion bootable usb (I had trouble making a Mavericks bootable usb from Snow Leopard, and since I had bought Mountain Lion for my desktop, I just decided to do a fresh install of that, and then upgrade to Mavericks). I had no problem booting to the usb, erased my hard drive and did a fresh install of Mountain Lion. However, after the install on the usb, my mac restarted and got stuck in a restart loop. It will chime, show the apple logo and spinning gears for a few seconds, then the gears stop spinning, and then the mac immediately restarts (this time displaying a message saying the mac has recovered from a shutdown in a number of languages), and the same thing happens again.
I was able to boot into the recovery partition, checked the permissions, found some that needed to be fixed, ran the repair permissions, verified the disk and was told the disk appears okay. Tried to then restart and same thing.
I have reset SMC, NVRAM, and none of these change anything. I booted in single user mode and ran fsck -fy, and recieved a message saying modifications were made, rebooted, same thing.
I have booted in verbose mode and the system restarts at the same point every time, right after displaying a message that says
SMC::smcReadKeyAction Error: (and then something with "BEMB", it goes by really fast so its hard to read exactly)
I have managed to boot into safe mode, but this has not made a difference. On one of my boots into safe mode, I went ahead and made a Mavericks bootable usb, and restarted the process: wiped the drive, installed mavericks, but I am in the exact same situation. I can still boot into safe mode.
I have seen some other issues that people have posted, but most involve the system freezing after the apple screen (not restarting) or do not involve freshly formatted HDs.
I'm just tying to find out if this is a hard drive issue, or if my mac itself needs to be retired. It has had a pretty long life (being 5 years old), and one of the RAM bays doesn't work (it is only running 4GB of ram, not sure if that can cause a problem with the boot cycle).
Sorry if thats a lot of information, I've been trouble shooting this for a few days. But thanks for any help you can offer!
A strange note:
-when booting from the mavericks usb, I got stuck in the restart loop a couple of times. I managed to get past this by clicking the mousepad a few times right after the gears finished spinning. The mouse became visible, the apple screen shifted color a bit (went from a bluish gray tint to an orangish gray tint), the mouse became visible, and I got to the reinstall menu as normal. As far as I can tell the clicking may have been coincidental, but it was the only time I was able to boot the usb, and I wasn't going to risk restarting to test that, and then not be able to boot again.

Hey, thank you for your reply! I didn't have everything backed up, but I have a lot of my important stuff saved, though, so that's somewhat of a relief..
As far as my hard drive is concerned, would I have to send it in somewhere to get it fixed or would I just have to get a brand new one? If so, how much? Sorry if I seem a bit amateur, but this computer is my first personal computer, and I'm really lost without it!

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