Hi ransac7:
I had similar problems with a G3 iMac. It started with the computer freezing when I tried to change the screen saver, then I discovered I couldn't add any users. I tried all the usual troubleshooting, with no success. When I put the hard drive in another identically configured iMac, all the problems went away, so I'm left thinking it's a problem with the logic board.
I hope that isn't the case with your computer, but if you're under warranty, you should have the board tested.
For details of what I went through, go
here
Good luck!
Andrew
14" G3 iBook (700 MHz, 384MB RAM) Mac OS X (10.3.9)