Restart into Safe Boot mode:
(Restart, holding the shift key, until you see the rotating gear under the grey Apple icon) Release the shift key at the point, your Mac will continue to boot to a login screen, and continue to your desktop.
Run the iLife installer then.
Restart normally after the install completes.
If that is a completely fresh install of 10.5, and updated to 10.5.8 before you even tried to install iLife, then I suspect that it's simply a bad OS X install…
Wipe and reinstall. Make sure that nothing is attached (external hard drives, etc) other than what you NEED to install the system, and your other software installs.
If you think that iTunes Helper is interfering (although I have never heard of that), then you can make sure that is not in your user Login Items.
Another possibility that I might try (particularly if you still have problems….) :
If your PM G5s are basically identical - swap the hard drives, and try the install in the OTHER PowerMac.