(will not play ps2 orignals or backups)... When it goes to red screen that is a DISC problem. You should recheck your modification if not done already, that really sounds like a modification problem, recheck your points.
It has nothing to do with your harddrive so stop formating etc. or does this problem only happen when the hard drive is installed?
PS2 V9 MATRIX Infinity HDloader on MC
PS2 v12 with Magic V KX with Fix II and IDE HD installed
XBOX 1.5 TSOP
XBOX 1.6 Executer with LCD