RATIONALE: Giving chemotherapy and total marrow and lymphoid irradiation before allogeneic hematopoietic cell transplant helps stop the growth of leukemia cells. It may also stop the patient's immune system from rejecting the donor's stem cells. When the healthy stem cells from a donor are infused into the patient they may achieve brand new hematopoietic recovery. Sometimes the transplanted cells from a donor can make an immune response against the body's normal cells, resulting in graft versus-host disease.

PURPOSE: This study is to evaluate the toxicity and efficacy of total marrow and lymphoid irradiation conditioning when given together with combination chemotherapy and allogeneic peripheral blood stem cell transplant in treating patients with myelodysplastic syndrome or acute leukemia.

Patient receives preparative therapy including cyclophosphamide and total body irradiation (TBI) of 10 Gy or total marrow and lymphoid irradiation (TMLI) of 12-20 Gy, and starts immunosuppressive therapy using cyclosporine or tacrolimus, methotrexate-based prophylaxes, followed by peripheral blood stem cell transplantation and granulocyte colony-stimulating factor administration.

Inclusion Criteria:

1. Myelodysplastic syndrome with excess blasts: Cytopenias, Unilineage or multilineage dysplasia, 5-19% blasts in bone marrow.
2. Acute lymphocytic leukemia or acute myelogenous leukemia who are in first remission or second remission.
3. Karnofsky performance status (KPS) >= 70%
4. Women of child-bearing potential and men must agree to use adequate contraception (hormonal or barrier method of birth control or abstinence) prior to study entry and for six months following duration of study participation; should a woman become pregnant or suspect that she is pregnant while participating on the trial, she should inform her treating physician immediately
5. All candidates for this study must have a human leukocyte antigen (HLA) (A, B, C, DR) identical siblings who is willing to donate primed blood stem cells or a 10/10 allele matched unrelated donor; a single allele mismatch at A, B, C, DR or DQ and a killer immunoglobulin-like receptor (KIR) mismatch at C will be allowed; all ABO blood group combinations of the donor/recipient are acceptable since even major ABO compatibilities can be dealt with by various techniques (red cell exchange or plasma exchange)
6. A cardiac evaluation with an electrocardiogram showing no ischemic changes or abnormal rhythm and an ejection fraction of >= 50% established by multi gated acquisition scan (MUGA) or echocardiogram
7. Patients must have a serum creatinine of less than or equal to 1.3 mg/dL or creatinine clearance > 80 ml/min
8. Hepatic: bilirubin, aspartate aminotransferase (AST), alanine aminotransferase (ALT), Alkaline phosphatase (ALP) < 5 x upper limit of normal (ULN)
9. Pulmonary function: Carbon Monoxide Diffusing Capacity corrected (DLCOcorr) > 50% of normal, (oxygen saturation [>92%] can be used in child where pulmonary function tests (PFT's) cannot be obtained)
10. The time from the end last induction or re-induction attempt should be greater than or equal to 14 days
11. All subjects must have the ability to understand and the willingness to sign a written informed consent

Exclusion Criteria:

1. Diagnosed extramedullary leukemia
2. Active uncontrolled infection at time of enrollment or documented fungal infection within 3 months.
3. Evidence of Human immunodeficiency virus (HIV) infection
4. Prior myeloablative transplant within the last 6 months
5. Prior radiation therapy that would exclude the use of TMLI
6. Relapsed patients who have undergone autologous or allogeneic hematopoietic stem cell transplantation previously