Throw away the whole Previous Systems folder. You may have to reboot to get the trash to empty.
Make another user for testing purposes in Accounts and log in to it, if the same thing happens then run this;http://support.apple.com/downloads/Mac_OS_X_Combined_Update_10_3_9
The combo updaters not only will let you update to 10.3.9 from 10.3 through 10.3.8, it is also a known trouble shooting step since it replaces so many system parts.
They also have smaller incremental updaters that only do point upgrades, for example from 10.3 to 10.3.1 only, they are much smaller in size than combo updaters.
If that doesn't work, reinstall the OS but don't do an Archive and Install, erase and install instead.
You can also during the install choose Customize, and not install any extra printer drivers, fonts, or foreign language support to save a bit of disk space.