It's too hard to tell what's going on and to guide you properly. Do you have an AC adapter? is it working? Are you unplugging it and then the computer shuts down? is your battery shot? Is an install disk scratched or just got a smudge maybe?
It's been years since I installed OS 9.2, but I think Apple changed the Hard drive format about the time OS 9 came out and I want to remember that OS 9 gave you the option of reformatting the drive to the new format. IF you did that, then I believe you cannot go back and install OS 8.6 any more. The new format is a good thing. If you can get OS 9 to install, install it again and tell it to reformat the disk. Sorry, I don't remember exactly how to do it. Just click on various buttons presented during the install and look for it. Of couse this should be somewhere at the beginning of the process, before files are being loaded to the disk.
Sounds like the CD reader is working, but dirty, smudged, or scratched CDs can prevent files from being read from the disk.
It doesn't hurt to reinstall the OS although it is almost never necessary on Macintosh (once things are working in the first place, I mean), unlike PCs. Since 1988 I've never HAD to do it on any of my macintoshes.
As you see the various screens during OS install keep an eye out for buttons like "customize.." or something like that. You'll see that several optional programs are being installed, including Appleworks, which is a decent word processor.
And there is a "notepad" like program called "simpleText" that gets installed also. simpleText gets installed no matter what.
Somewhere on these customizing screens you can select what languages you want. By unchecking everything but what you want (English, maybe?) you'll save almost 100MB of disk space on the install.