Is your power supply made by Q-tec by any chance?
I have a system (MSI K8T, Ath64, 6800GT plus a bunch of HDD`s and cards) which behaves in exactly the same fashion. It has a Q-tec 450W supply.
Substituting an old 350W supply removes the problem, similarly connecting the Q-tec to a KT4 Ultra board produces the symptoms on that machine.
Do you have an alternative power supply you could try?
Even a small (250W) one will run the board well enough, if you unplug any unused equipment (CD drives, second HDD`s etc), for test purposes
Its also possible that the case switch may be faulty, it should only work on its two wires, any shorts to the metalwork of the case (trapped wire?) may cause a problem.
Lastly, the mobo may not be calling for power properly from the supply but I think this is
In cases like these substitution of known good components for suspected faulty ones is usually the easiest method of problem solving but I appreciate you may not have spare psu`s, cases, mobo`s etc floating about.
I would suggest waiting for further replies before rushing out spending money on new parts, someone else may have a better solution.
(In my case though it`ll be an Enermax 600W as soon as I get round to it ;-)))