Did you run the Drive Setup and format the disk? I believe with 8.1 you have to use HFS, as it's not HFS+ aware. Anyway, why such and old (old old old) OS?
OS 8.1 will run very well on that hardware-- I think that's what it originally shipped with, anyways. But, you need to run Drive Setup first if that's a brand new hard drive.
As a matter of historical fact, OS 8.0 was the first OS to ship with HFS+, supporting a greater than 2GB volume without ugly kludges. If you really want to get a nice system on that G3, try running OS 8.6-- that's my usual choice for hardware of that vintage.
alc6379
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