I know it is an old thread, but can you test the 8500 PSU in a PowerMac 8500?
I am testing some 8500 power supplies that were known good, and I only own a 8100.
The behavior is the same, if you press the power button it turns on for a second, then turns off. But if I use a proper 8100 power supply, it stays running.
I've read some posts that you can use a 8500 PSU in a 8100, but not vice versa.
Also on my 8100 PSU, if I pull the PS_ON pin high for a second to 5VSB, it latches on and keeps running. If I pull the PS_ON pin low (to ground), it will turn off.
On my both 8500 PSUs, it runs as long the PS_ON pin is being pulled high to 5VSB, but turns off immediately when I disconnect it.