OUTLINE: This is a multicenter study. Patients receive induction chemotherapy consisting of PSC 833 IV over 2 hours on day 1, then continuously for 96 hours; daunorubicin IV continuously on days 1-3; and cytarabine IV continuously on days 1-7. Filgrastim (G-CSF) or sargramostim (GM-CSF) is administered subcutaneously (SQ) or IV beginning on day 15 and continuing until blood counts recover or day 21. If patients do not achieve complete remission after one course, a second course is administered. Patients who achieve A1 bone marrow, B1 peripheral blood, and C1 extramedullary disease status after 1 or 2 courses of induction chemotherapy proceed to consolidation therapy, which begins upon recovery from induction therapy. Consolidation therapy consists of PSC 833 over 2 hours on day 1, daunorubicin IV over 1-5 minutes on days 1 and 2, and cytarabine IV continuously on days 1-5. Treatment repeats for a total of 2 courses. Patients are followed every 6 months for 2 years and then annually for 3 years.