I will try your suggestion about overwriting every single disk block with zeros. The drive is set to Auto in the BIOS and is detected perfectly by the installer. It shows the correct size and I've run multiple successful verifications on it with the Disk Utility tool.

For the record, I've tried the install about 4-5 times, yielding the same result, regardless of whether the additional drives are connected or not. I've even tried disabling them from the the BIOS to the point where only the 500 GB SATA drive was visible making no difference to the final end result. My CD-ROM is primary IDE master, DVD is secondary IDE master. Does the installer expect the SATA drive to be a specific # master?

Current drive configuration based on connection:

IDE Primary Master: CD drive
IDE Primary Slave: none
IDE Secondary Master: DVD drive
IDE Secondary Slave: none

SATA 1: 500GB
(Under BIOS it's listed as 3rd Primary Master and the drive I'm trying to install to.)
SATA 2: 250GB
(Under BIOS it's listed as 4th Primary Master)
SATA 3: 160GB (RAID configured)
SATA 4: 160GB (RAID configured)
(Those are listed under the RAID controller BIOS displayed after initial BIOS screen as a healthy RAID configuration)

The MSI mobo is very flexible about selecting a boot device and I plan to use the built-in BIOS boot device selector to switch between Leopard (on the 500 GB drive) and WinXP (on the 250 GB drive).

Regarding the mouse and keyboard, I actually have 2 mice and 2 keyboards connected, one USB and one PS/2 of each, so I really haven't run into any problems with those (at least in the installer boot up).