I have another (probably not so bright) idea: if you haven't tried this one yet, then burn the .dmg onto a blank CD (if enough space is available) and then reinsert the CD into your drive. See what happens and post back.

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iMac G4 OSX 10.3.9
RAM 256MB
LW 4.10.5 Basic
ADSL anything from 3 to 8Mbps/around 1024kbps

"Raise your can of Beer on high
And seal your fate forever
Our best years have passed us by
The Golden Age Of Leather"
-Blue Öyster Cult-