Comments/Problems:

Machine boots from CDROM, starts SILO Version 1.4.13,
display welcome message (welcome to Debian GNU/Linux lenny! [...]
built on 20081218-10:06 [...]).

boot:
Allocated 8 Megs of memory at 0x40000000 for kernel
Loaded kernel version 2.6.26
Loading initial ramdisk (4284688 bytes at ....
Memory Address not Aligned

Choosing "boot: rescue" or "boot: expert" gives the same. The machine
boots SunOS 5.8 from its disk0 just fine, so the hardware apparently is
quite OK. The machine has 1024 MB memory installed.

Is this a known problem? What do I need to do? I am new to unix/linux and learning it on my own.

Thanks for all the help!

Try the tips given here: Booting gutsy CDROM on SPARC Blade 1500/2500 - Ubuntu Forums

fozentin thanks for the tip.

Pressing STOP A to disrupt memory initialization did work. After that I was able to install the Debian 5 on a SPARC Ultra 10. Installation process did much longer than what I expected, almost over an hour.

Now I will install it on a second SPARC machine and try to create a cluster.

It night need to reset-all from the OBP to boot.
Stop - A is the Sun way to send a break, so if you are using a pc keyboard, or if you are connected by serial console, find your terminal emulation software's way to send a break. (On HyperTerminal I think is Ctrl + Break)

That will put you on the OBP.
{ok}
Then alter the booting order editing the enviroment variable "boot-device"
assuming you are at the OBP, write

{ok} setenv boot-device cdrom disk net

Do a reset all
{ok} reset-all
If you get to the OBP again do a
{ok} boot cdrom

Hope it helps.
Regards,
Sebastian