I just tried now... when I boot, I have the chameleon bootloader, then I chose my NTFS drive, then I have the same menu you have, then I choose MacOsX and F8, then OSX, hd0,4... this won't boot for me... it loads stuff, then freezes. Yet, when I use the bootloader, it boots everytime. I'm sure if I did -s, it would freeze too. The fact it reboots with -s is weird... i'm not sure it's driver related in this case... your hardware is simple, like mine, and I can't see what would make the LG so different...

I'm not a great tech, but I think we can conclude that the chameleon boot loader is essential for you and me to boot OSX in the way we installed it. I can boot and not you, and this is the same hardware almost. So what's different between you and me? You kept the initial partition install from LG, and I erased everything before reinstalling XP. I can only speculate, but I think this has to do with the master boot record and partition table. I'm pretty sure the LG and Samsung install are made to insure nothing will overwrite the mbr, that's why they have a hidden partition etc. Maybe chameleon can't be written on that partition... I don't know how to solve this technically, I knew something like that would happen for me that's why I erased everything to make sure it's a clean slate. I'm sure someone somewhere knows the quick fix for you but it's not me. Most likely it involves installing chameleon manually and modifying some config file for it.

I can tell you one thing. But here I can't emphasize enough to be CAREFUL. When you start the Iatkos installer, you know in the GUI there is a menu Utilities, with Diskutil etc.. also, there is an item Chameleon... I think it can be installed manually from there... I've tried once, and after playing with it I COULD NOT LOAD ANY PARTITION - 'ntldr is missing' or 'no boot device' - so I warn you. But I think we can assume that the bootloader gets installed by default when you install so there must be something preventing it from installing... so maybe installing manually wouldn't make a difference after all. If you ever play with it, backup your data to an external drive before. If you ever play with it, it asks the id of the drive etc... so before using it, use Terminal in the utilities and do a 'diskutil list' to figure it out... I don't know where the boot loader should be installed, I guess on the LG partition in this case? or the root of the OSX install? that's also why playing with it will ruin your partition table... I'm not familiar enough with this stuff...

So aside from finding a quick fix, I think only 2 things remain:
1- I would try upgrading my bios to the latest, then rebooting and doing 'load setup defaults' in the bios, then fix one or 2 things maybe (look at the settings before flashing). Or maybe just leave the settings to default after flashing and trying to reinstall OSX and see if you you have the chameleon bootloader. Flashing is easy nowadays, me on my samsung I install a program in XP from the samsung site and it checks to see if there is a new bios and flashes it if so. Be careful when you do this, close programs and never shut down, make sure you're on AC etc. Honestly, I don't think this will work, unless you had an option boot protection that was enabled but you say you don't have that. I conclude the issue is the LG rescue partition.
2- Back your data elsewhere, erase all partitions and data, and make a new partition scheme.

You may be right, it may be a driver issue, but I think it must be related to the bootloader.

This is the best I can do.

Search google, when I found out you could install iatkos to a partition etc, i read some comments someone did it preserving the manufacturer partition... but because I couldn't be sure I erased everything. Anyway I can reinstall xp by myself using a usb key now, even though I don't have a dvd drive. Yeah, that means I don't have the original copy of XP running. But hey, I have an oem license lollll.

Good luck!