I have 2GB of RAM and I am able to boot off a 5.3 Diagnostic CD. So, I know it is booting off the CD drive.
I have also tried another 5.3 CD with the same problem.
OK. Sounds like there should not be a problem with your hardware - as it will boot from one CDROM, but have you verified that your cdrom (not cd drive) is okay.
It has been a very long time since I have installed a 43P/44P system from a CD. If you start in the SMS menu (press 1 as the system starts to enter SMS menu, not 5 or 6 to start default/service boots) and press the option to choose the install media, it should say AIX 5.3 at some time - before you boot. From that menu try to start the boot process and pay attention to the LED/LCD codes as the system starts. And give me an update if it continues to be a struggle.
p.s. have you got an older version of AIX to try? Not to install but just to test that your system will boot.
p.p.s. consider using the diag disk to format/certify the harddisk as well.