Cannot format new hard drive?

Sounds like the screen you were getting was a kernal panic. This can be caused by any number of issues. But its hard to say if its related to the install process or not.

Did you have any other faults with the machine before starting the hard drive replacement.

Can you also confirm what type of disk set the snow leopard disk is?

If it is a retail disk set (with an image of a snow leopard on the front), then that should work fine. If it is a grey system disk, then it will not work with your machine.

The grey disks are machine specific sets that are shipped with Macs from apple. Your 24" 2007 model was shipped with 10.4.10, so a grey 10.6 disk wont work (10.6 wasn't shipped with iMacs until Late 2009)

It does sound like you're having an issue with your optical drive though, as its hanging on the loading process. Presumably you are hearing some loud noises from the drive as its attempting to load?

If you get an unusually long hang time on the load process, that can cause a kernal panic, but it could also be a different hardware fault, as others have noted.

One thing you can try, is making a disk image of the 10.6 disk set (as long as it is a retail disk set), then restoring that disk set onto an 8GB USB stick, then using it to boot from in the same way. that way you're ruling out your disk drives potential fault in the process.

I hope this helps.