You know, it sounds a lot like the symptoms of a PAL machine trying to display on an NTSC screen, or Vice-Versa. It will be in BW in RF or composite if that is the case. It would display OK on an RGB monitor, or if you have a display that can display the other format.
Where are you located? Do you know if it NTSC or PAL? You can also experiment with booting with both mouse buttons down and switching between PAL and NTSC in the early boot menu.
