Mac OS 9 upgrade

Mac OS 9 installation - Extensions

I am trying to upgrade PowerMac G3 (Blue & White 1999, with 512 MB RAM) but problems are mounting...
The computer has Mac OS 8.6 installed right now, but it is not enough for some applications I would like to add.
The old operating system is installed on Hard Drive 1 (HD1) - I want to install the second operating system, Mac OS 9, on Hard Drive 2 (HD2). Later, I would use the Startup Disk in Control Panel to switch between the OS systems.
Both hard drives (ATA/IDE type) have 20 GB capacity (there is around 7 GB free space on both).

After placing Mac OS 9 CD disk in the CD-ROM drive and restarting, the computer boots from the CD, but soon after a message appears:
"Sorry, a system error occurred.
error type 11
To temporarily turn off extensions, restart and hold down the shift key"

Following the instructions, system boots from the CD, Mac OS 9 with extensions off.
Next, the Mac OS 9 installation on HD2 - it starts well, but after few minutes the process freezes... It has already happened three times.
What could be the reason for it?

Firstly, I am puzzled why the Extensions has to be turned off when starting from the Mac OS 9 CD disk ?...
Similar thing is happening when using Norton SystemWorks for Macintosh CD - after booting from the Norton CD disk, messages follow:

"Sorry, a system error occurred.
"QuickTime"
address error
To temporarily turn off extensions, restart and hold down the shift key"

Or, another version of the message:
"Sorry, a system error occurred.
"QuickTime PowerPlug"
address error
To temporarily turn off extensions, restart and hold down the shift key"

Or, just plain:
"Sorry, a system error occurred.
address error"

Any advice?

Is this a retail-purchased, load-into-any-computer OS 9 disc, or one that came with a specific machine?

If the disk was shipped with a laptop, for instance, it won't load a blue-and-white.

Apple has used specific computer "enablers" with their system discs since floppies formed the cutting edge. That term appears to have fallen out of use with OS X, but the effect remains. You might have to buy an OS 9 system install that will run on any Mac from that era.

The disk is retail-purchased (indirectly, through eBay several years ago).
I am guessing it is not the Mac OS 9 CD system disk problem, because similar error messages are generated when using software on Norton SystemWorks for Macintosh CD.
Should I assume that there is something wrong with the hardware?
For example faulty memory? Is there a way to test it?

You are holding down the C key when you boot from the dics..Right? AS if you boot from the CD theres no extensions to turn off. Al just throw this in .. B&W's don't really like big drives,try to partition the drive..a section to hold just the OS.