This is a MacPro1,1 (2006 model) -- still correct?
I know that you now have a correctly setup, bootable USB Lion installer.
What I don't know, is what other hardware is installed.
Go back to basics: nothing else attached, except keyboard/mouse, power cord, display (only one) attached, just for this test.
Graphics card in slot 1 (the bottom slot), no other pcie, or any other cards in any other slots.
One pair of RAM sticks, in riser A, in the top two slots.
While you are inside, double-check that the power supply connectors (4), are seated completely.
I never use a front-panel USB port for installing a system - only use a USB port on the back panel for booting/installing. It's just an old habit of mine. Probably not a real issue for you, as you apparently don't have a problem booting to the installer, and installing the system, it's the restart to set up the user. Still correct?
What exact manufacturer and model hard drive are you trying to use? (I have a Seagate 8TB that is incapable of booting a Mac. I can install the system all day long, but it won't actually boot from that 8TB drive, no matter what I do.