After hours of similar problem this is how I got my SNOW Leopard installed..
The Disk I was using was bought from Apple as an update disk. I used it awhile ago to install on my old macmini...
So this morning I created new USB boot stick.
The first thing I did was make a DMG of the DVD.
Then in Disk Utilities I did a "Scan image for restore
The first time an error came up and my Drive Genius 3 opened and scanned the file. It reported NO errors.
I then then did a "Scan Image for restore" this time it was successful.
I the then used this file as the source file when making the USB boot stick.
I did all of this on my old mini
as soon as I put the USB in the iMAC it open to 10.6. Open the installer file and all is working.
All OS software is up to date. Loading iLife11 now