Well, I never work with labels, but I do with UUIDS, that is pretty similar. GRUB recognizes them, but I'm not sure if it also recognizes LABEL. Also, when GRUB doesn't recognizes the partition, kernel panic isn't the output it gives. It says something like "no kernel in this partition" or similar.
It seems like last error IS significant:
EIP : [<c041041c>] powernowk8_init+0x1c2 SS : ESP 0068 : c1866fa0
I'm not sure at all, but I think that maybe you're trying to load a bad architecture on your computer. Probably we'll need some more info for helping you:
* Which is your CPU architecture? (i386, AMD64, powerpc...) or which is your CPU? (Pentium 4, Core 2 duo, Celeron, Xeon, ....) and year you bought it?
* Which is the install CD architecture?
* Have you tried an exhaustive memtest on your computer? (memory may be damaged)
* Have you tried some other live distro, as ubuntu or knoppix?
See you here!