Ok, first, you should tell us your error message about the hostid$ thing.
About the installation: you are right, it is surely the unreadable part of the second cd that makes your distribution goes wrong.
What about trying a new installation ?
Also, where did you get the CDs ? If you get those by someone: ask him/her if (s)he got problems installing it. If not, try with those 'originals' cds.
If you downloaded them, check the .iso file of the cd2.
You should 'check' by doing a md5sum of .iso file, and check the result with the official md5summ. which is : aba5615830ecf189fc143f6c91128124
use the command "md5sum Mandriva-Linux-2005-Limited-Edition-Download-CD2.i586.iso" to get the result (may take some minutes to calculate)
Hope this help..