Well, if you got a kernel panic when booted from the DVD then you've done the hard part - determined that it is most likely a hardware problem. Of course it's a bit confusing that another DVD would boot, but sometimes hardware problems are intermittent.
Before checking hardware, see if it will boot with the Shift key held down (safe mode) or if it will boot with Command-s held down. That might give more information.
(Since you got past the login screen, it still could be a problem with that account. If you are ever able to get logged in, make a new test user account and log into that.)
See if it will boot the Hardware Diagnostic DVD.
The hardware things to check are
- reset the Power Management Unit: remove battery, unplug from power and then hold down the power button for 5-10 seconds
- Connected USB and/or FireWire devices or cards - remove all of them
- RAM: if you added any, remove it and revert to the Apple RAM.
- If only the original RAM is there, remove one of the two DIMMs and try to boot. Swap that DIMM to the other slot if it still crashes. Then try the other DIMM the same way.
- If none of that works, you could try reinstalling the OS but with a hardware problem you may wind up getting stuck halfway through and have no way to check any hardware problems.
Moving to Genius Bar.