|1) you put the good stick of 256MB of RAM back, and see if your stability issues vanish.|
2) you verify that the RAM is compatible with your mobo/BIOS. Not just "DDR1," but that the manufacturer of the mobo supports your RAM (Kingston > Patriot, for example). If yes, you could try sticking the 1GB stick into a different slot on the mobo to verify that the slot is not the problem.
3) Try the 1GB stick in another computer, or try another 1GB stick in your computer. Either requires additional hardware (that's why this is step 3 instead of 1 or 2)
How far does the boot process get with the 1GB stick, btw? does it just make loud beeps with no BIOS, or does it actually start to boot but crashes shortly after? If NOTHING, then it's probably incompatible RAM. If it crashes frequently, it could be damaged RAM.
have you done any overclocking or frequency changes in the BIOS to your FSB/RAM frequency?