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Hmm. The MBs I've seen typically require you to stagger matching sticks of ram. So if you had 4 slots, you'd put them in 1 and 3, or 2 and 4, not next to eachother.
I know this is going to sound stupid, but is it possible that the MOBO is freaking out because it has too much ram plugged in? If the PC HAD 2x256 in it, that sounds like some old jargon there.... maybe it just doesn't know what to do with 2 gigs and starts having a stroke.
I can probably stop by and take a look one night if you guys want. Sometimes you need to tweak some settings in the BIOS for timings and such, it is also possible you could have picked up a bad stick o ram.
If you could take a look, that would be awesome! We tested both sticks, and both work when individually placed - just not together. So I think I've ruled out getting a bad stick.
The mobo supports 1gb sticks and up to 4gb total, so they should be fine there. I might be able to come over Saturday if you guys are around, otherwise it may have to be next week, I'll be out of town tomorrow and have plans Friday/Sunday.