I start My ibook g3 with Mac os x puma cd disk and it runs making lines of installing until "Panic: we are hanging here..."

you have to go to the printer manufacturer to get drivers for the computer. The os comes with drivers for different printers but if your printer was manufactured after the OS you are using wa made it will not be inherent to it.

One thing to do is to connect the printer to the computer and reinstall the os with the system disk. Sometimes this will fix it. Another way to do this is to run software update from the apple drop down menu to see if there are any updates to your current os. That machine should run mac os x 10.4 if you have enough ram in it. Ram for that machine is very cheap.

10.6 will not work with a g3 processor as it requires an intel mac to run it.

Start up the computer from the system disk that up have. Put the disk in and start the computer with the C key pressed until the star screen comes up. Then troubleshoot from there.

What is happening is the mach kernel is hanging during bootup. This is likely caused by a kernel panic. Boot-time kernel panics are caused by the following things:

1. A botched software update
2. A badly behaving hardware device
3. Flaky RAM memory.
4. You are WAAAY too low on free disk space.

Insert Installer disk and Restart, holding down the "C" key until grey Apple appears.
Go to Installer menu (Panther and earlier) or Utilities menu (Tiger) and launch Disk Utility.
Select your HDD (manufacturer ID) in the left panel.
Select First Aid in the Main panel.
(Check S.M.A.R.T Status of HDD at the bottom of right panel, and report if it says anything but Verified)
Click Repair Disk on the bottom right.
If DU reports disk does not need repairs quit DU and restart.
If DU reports errors Repair again and again until DU reports disk is repaired.
If DU reports errors it cannot repair you will need to use a utility like Tech Tool Pro or Disk Warrior

If you can make it this far, it is likely that your hard disk and the majority of your computer hardware are functioning correctly and your issue is software related.
Here are the best methods to troubleshoot Mac OS X filesystem problems: http://support.apple.com/kb/ts1417

It sounds like your start up files are either missing or corrupt. You need to reboot with your system disk in the cd rom (hold down the "C" key as you restart) or do a fresh install of an OS.

If you have the original Install CDs that came with the iBook put in Install Disk 1.
When the Menu Bar appears go to Disk Utility (under file manu). Choose your HD and look for the S.M.A.R.T. status. It should be Verified. Then choose Repair Permissions. After that is done choose Repair Disk.

If none of this works find the Hardware Test Disk and run that.

This is the message you see when a version of OS X has been installed on a Mac that needs a later version of OS X at minimum, or when the custom gray install disc for one model of Mac has been used to initialize another model of Mac.
You posted this under "iBook G4," and the platform in the error messages says "PowerBook." Provided you posted in the right place, that confirms the above diagnosis.
Initialize your iBook with the proper gray disc, or a retail OS X installation disc, and it will operate properly.

It sounds like the system is corrupted. With an install disk try starting the mac up holding down the c key on the keyboard. If the screen is working properly on startup, see if the hard drive is showing up. If it is, try reinstalling the system software making sure that you do not reformat the hard drive but preserve users

The hard drive has (or is busy) packed up. That is the clicking noise you hear. You may obtain a new drive and install OS X (10) but to find those kind of CD's and hardware drivers may be quite a task

If you stilll have the Mac OS installation CD available the when it is starting up press down C and it will start from the Mac OS X installation Set up then you can reinstall OS X and it should work.