It sounds like your Panther install on the hard drive is corrupt or has some problem keeping it from booting up all the way. The "no smoking" symbol means that there's a valid OS X installation on the drive, but something (software/hardware error, etc.) is keeping it from booting all the way.
When you start from the Panther CD, open up "Disk Utility" from the menubar and run a repair on the boot drive. It may fix some or all of the problems keeping the computer from booting up.
Another possibility is that the processor overheated and could have damaged itself due to lack of air circulation, but let's hope not!




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