I have not had access to my Panther today, but I heard that the reason DW hangs in Step 8 relates to fact that Panther turns on the journaling feature for volumes. As such, you must turn it off using Disk Utility or Terminal before optimizing a volume or rebuilding its disk directory with DW or Drive 10.
To disable journaling, open Disk Utility, highlight the volume, go to File in the Menu bar and select "Disable Journaling".
That's the theory anyway, but I won't be able to test it until tomorrow.
Harv