Did you try to reset the SMC?
Resetting the SMC for Mac Pro, Intel-based iMac, Intel-based Mac mini, or Intel-based Xserve
1. Shut down the computer.
2. Unplug the computer's power cord.
3. Press and hold the power button for 5 seconds.
4. Release the power button.
5. Attach the computers power cable.
6. Press the power button to turn on the computer.
After that try again from a diskdrive (maybe Firewire?)...
Did you plug off all external devices (USB / Firewire)?
If not, do it and reboot with the original CD and the internal CD-drive.
If this does not work, I think you got a hardware prob... :-(
Another idea could be, that you use SL- and Lion-DVDs which came with other computers. These DVDs does only work with computers with the same hardware they came with.
I dont know how that answer got marked as "This solved my question", but I'm still having an error ):
I've tried CD's, USB, and nothing worked. That is so stupid that it's hardware specific. This is my first time going apple and never coming back again.
Could you provide a way I could diagnose the issue ? All I get is a Prohibited Sign so I have no clue at all what the problem. Is there a way to go into terminal mode so I can atleast get the error code and such
Also, Is there a way I could find out which hardware is giving me the problem ?
On the first CD that came with the Xserve is a hardware diagnostic tool. But I think you cannot run it because your Xserve stops booting before.
You can try to start in verbose mode (cmd+v at booting).
Also you can try to boot in singleuser mode (cmd+s) or in secure mode (holding shift right after startup signal und release it if you get the spinning wheel).
If you got a second mac you can start in target mode (holding "t" at startup) and connect the xserve with firewire to another mac. So you can repair the harddisks...
Also take a look here: