Originally posted by joshd
even with the pc off, surges can damage it. you need to unplug it really.
That is why people should consider investing in UPS or power surge protectors that protect PCs and electronics all the time.
But this post is correct, even if you turn off your PC as long as it is not plugged into a UPS or surge protector it can still be damaged.
Anyhow, a 500W PSU should have enough power to run that system without flaws. Put in another PSU and see what happens. If it still behaves like that then at least you know the problem is not the PSU.