My GUESS would be either a RAM problem or a HardDisk problem. Either one can be replaced easily enough. (I had a 266 iMac G3 that ended life with a CDRW and 80GB drive
But... if you have the CD's that came with it, run the hardware test program. It will take a while, but it will run some diagnostics. If it says you have bad RAM, then you do.... If it says you don't have bad RAM, well, you still might. It will also check the HD's ability to spin-up and check the surface integrity... again, even if it says OK, it could have missed something, but you can generally believe when it says a compnent failed.
I've a 400 G3 iBook plugged into my stereo and it makes a great music "server"... iTunes fed through the house speakers... if only it had a remote.