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Here's a succinct summary of the problem:
>>> x = [0] * 2**20
>>> x *= 2**20
Segmentation fault (core dumped)
>>> x = [0] * 2**20
>>> x * 2**20
[]
>>>
The problem is that list_repeat()'s check for an overflow is flawed, and list_inplace_repeat() doesn't check at all. Attached is a patch that adds a correct check to both functions. With the patch, both variations throw a MemoryError exception. The patch is against Python 2.5, but should also fix 2.5.1/2.6/3.0.