The symptom you discribe is the logic board problem exactly. I did not realize an ibook could still work with an external monitor if it had this problem. Be carefull pressing on the corner as the Hard Disk is right there, I killed two drives doing that same thing. The footprint of the ibook without its top half is tiny. It would make a great "imacbook" or lots of other cool thigs too.
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PB G4 15" 1.2ghz - Pismo G3 400 mhz - iBook G3 500 "Jukebox"
"SawSmurf" G4 500 - Quicksilver G4 Dual 1ghz modding...