Currently Being ModeratedFeb 21, 2013 2:59 AM (in response to Reminiscent of a Boss)
Mountain Lion is fully compatible with 2008 iMacs, I suspect either corrupt download that resulted in a corrupt install or a hardware fault. However you may have a hardware fault that may need to be professionally diagnosed. To see if there is a hardware issue run Apple Hardware Test in Extended mode at least 3x back to back. AHT isn't 100% reliable but it finds errors they are correct, if it doesn't that only means you need to take it into an Apple Store or AASP to be profesionally diagnosed.
Currently Being ModeratedFeb 21, 2013 4:27 AM (in response to Reminiscent of a Boss)
It sounds as if you erased the computer's hard drive and reinstalled Mt Lion. If so, did you create a new account and begin using the computer without using Setup Assistant or Migration Assistant? If you restored software and your account it is possible you also restored the root cause of your problem - a plug-in or driver or incompatible startup application. If OTOH you simply installed Mt Lion and began testing the computer it soundsmore like a hardware problem.