Everything you are describing sounds like a RAM issue to me. I just picked up a used 2600K/Z68 with 4x4Gb. I went to install the OS and had the DVD drive disappear, windows 7 hang during updates, failed boots, and BSODs. As soon as I ran Memtest, boom... errors started scrolling. Check every stick individually with memtest (boot off of a disk, not the windows program) and see which stick/s are bad.