how big's your power supply? likely not anything to do with that, but it's worth checking.
freezes generally related to a crappy motherboard or bad ram. you have crappy ram, but if memtest is working fine then it's not that. you didn't list a great motherboard - it's usually stable, but nor much more than that.
the light thing makes me think your psu is just defective, incorrectly interpreting the power-on signal (the thing it uses to activate a UPS if it craps out).