I have a white late 2006 mac aswell. It is running lion. Please try to install lion. It suggest...errr...borrowing a friends .dmg, mount it and burn with to a dvd with disk utility. Reboot. Hold the apple key down until u hear the chime and wait for it to boot. Be patient it takes a while to come up! Format the disk, Rename it,etc. and install. The system lags a VERY tiney little bit but it is very stable. If you can't, try to reinstall snow leopard, and do all the updates. Try the app store again.
Take it to the apple store at tell them you think this is the defect. They replaced all my caseing for free! Really-they will check your serial number and if it is, they will replace it. If not, It cost you 130 bucks. Not too bad, really.








