The first problem of theme selection seems to be a typo in the path where it's looking for the theme:
The "/hare/" part should be "/share/".
The garbled splash screen I have seen also. It happens because of the resolution set for your video card during the LILO setup done as part of the boot. Look at /etc/lilo.conf and select a different VGA mode. To do this, comment out (with #) the existing vga=<something> line, and uncomment one of the others. If you have vga=791, try vga=790. Some video cards with limited memory can't do a full 1024x768 screen with 64K colors. Also, some of the VL splash screens are 'hicolor' and will look very odd (pix is ok, but colors blotchy) when displayed on a screen only capable of fewer colors. If you look in /etc/lilo.conf, you will see a bootmap=<path to boot screen bitmap image> listed, likely pointing into /boot/bitmap/ You can try changing that bitmap image if necessary. VL5.8 supplied a couple images in the /boot/bitmap directory.
I can't comment much on the freezeups, but it's important to note what applications are running at the time, and what, if any, specific commands or actions cause it to occur. It sounds like X may be dying at times, which can leave the existing screen visible but with everything frozen. If Ctl-Alt-Backspace does nothing, it's likely X is already dead. You can try doing Ctl-Alt-F1 or Ctl-Alt-F2 to see if you can get to a text console. In some cases, you can regain some control, and you may be able do 'startx' to get X going again, but if something's crashed really badly, it can leave the machine unstable even then.