That many hard drives failing with a kernel panic indicates to me that your problem lies elsewhere.
When you boot from the install disk with no hard drive in what happens?
Is this a retail system installation disk? What system is it? Is it a machine specific "grey" installation disk and what system is on it and what machine does it say that it's for?
UPDATE
Pre-Installed MacOS: X 10.3.7 Maximum MacOS: X 10.5.8
There are other ways to format than Disk Utilities.
Here's How to Erase a Disk from Command Line in Mac OS X:
http://osxdaily.com/2016/08/30/erase-dis...
Here's how to use Terminal:
http://smallbusiness.chron.com/format-os...
crwdns2934105:0crwdne2934105:0
crwdns2934113:0crwdne2934113:0
crwdns2915270:0crwdne2915270:0
crwdns2889612:0crwdne2889612:0
1