OUTLINE: This is a randomized, multicenter study. Patients are stratified according to center, diagnosis (acute myelogenous leukemia vs other), and response to induction (partial vs complete remission). After induction, patients with M1/M2 marrow are randomized to arm I or II. Patients in complete remission after consolidation who have an HLA-identical or 1-antigen mismatched sibling or parent donor are randomly assigned to the allogeneic bone marrow transplantation (AlBMT) regimen; all others in complete remission are nonrandomly assigned to the Capizzi II regimen, then are randomly assigned to arms III or IV. Patients with refractory anemia (RA) or RA with ringed sideroblasts with indolent disease may be registered and followed. Other patients with myelodysplastic syndromes may receive 2961 chemotherapy or go directly to AlBMT. Patients with chloromas (granulocytic sarcomas) receive optional radiotherapy on arm V.