MRDOCA, make sure there are no extra USB keys inserted when you're booting, I still get that if I leave anything plugged in. Other than that, I can't think of anything, I couldn't get the 256 to boot any Linux, then I put the same HDD into my 16mb and it booted first time (didn't have to re-install either). Maybe try install the BootOS from George's first post on your slim, along with lv2-v9 and plug in your external that has Linux installed. If it works, you know it's down to hardware revisions (although I think you've gotta unplug USB for them too).
Cbrown87, have you extracted the 2 .deb files and installed them using Terminal? Click where I wrote "update" to download it, then extract them (copy to ps3 folder or Home folder) and use the dpkg command on both to install them from Terminal (without the bit in Red if they're in Ps3 folder), then you edit the kboot to point to them in the "/boot" folder (after installing them).
If you want, upload your kboot file and we'll have a look at it. You need to have those .debs installed first for it to work though.
flo, I imagine it might be too small, might aswell try something bigger if you can, I just hooked up an old 80gb 3.5" drive which works fine. Make sure to format it and give it one full partition too, I'm not that sure it's why you crash at 83% though, but it'd make sense if it's full.
@ everyone: Get an externally powered USB hub, so handy when we've only 2 ports!
oralphie: Will this allow chuck norris to play backups??? PLZ HELP!!!