Not good, but not incredibly bad either.
What you may need to do here is to run an Archive and install just where you are in the installer environment now. What the "volume check failed" means is that there could be an issue with your Mac OS X volume that you currently run your Mac OS X off of your hard drive with. The good thing is that your hard drive does not seem to be the issue.
It could be the current Mac OS X 10.5 Directory itself.
This is why I suggest an Archive and Install. What this process will do is
remove the damaged directory and create a brand new Mac OS X 10.5 directory on your Macintosh HD. Following the steps below, you will not lose your home folder files. -ARCHIVE AND INSTALL-
• Start up from your Mac OS X Install Disc 1 or Install DVD. Please remember to use the install disc that matches the current operating system your system haves.
Usually, you can start from the disc by putting it in your computer, restarting, and holding the C key.
• Hold the C key until you see a White screen, with a Gray Apple icon and eventually a Spinning gear.
• Release the C key only after you see the Spinning gear.
-Your mac will now boot from the disc and load into the Installer environment.
• Select your language. The Welcome to the Mac OS X
• Click Continue
. The Important Information window appears.
• Follow the prompts until you get to the licensing agreement screen
• An agreement sheet appears. If you agree with
the license agreement, click Agree
. Then Select a
• Click the volume that you wish to install to (your primary
• Click Options.
The installation options sheet appears.
• Select Archive and Install
• Select the volume which already has Mac OS X installed.
• You should also select Preserve Users and Network
, to preserve network and Home directory
• Click OK.
• Click Continue to begin the installation.
• Once the Archive and Install is completed, when you reach your desktop be
sure to run all Software updates to bring your new
Mac OS X directory back
up to current.
Also, if you look inside your Macintosh HD icon on your Desktop, look for a folder entitled "Previous System Folder" which will have all of your previous Home folder files prior to the Archive and Install.Locating Previous System Folder after Archive and Install.
Let me know if you have any other questions regarding this process, as I am here to assist you as much as I am able.