Have you tried it with L2 turned on? I think it gave me the same results. The BIOS of the K7M that I have lets me turn off L2 but it doesn't work, as mentioned above, unless you disable L1 as well. I think this is the case with many motherboards. I have been looking in to this for quite some time, as turning off L2 would enable me to boot up at a higher frequency an then enable L2 with a lower multiple through an L2 proggie. However, these proggies doesn't enable L1 and hence it's been to no use so far. Now i'm eagerly awaiting a proper BIOS release (or I could venture with soldering...).
This topic has been discussed several times at the BBS at amdzone. If you find a solution, please post back!