Advanced Issue With the_title() in a custom loop

Here’s my code:

<?php
//do an sql query for posts
<?php global $wpdb; /* i found out that this is required in the sidebar! and i think this is somehow relevant to the bigger problem!*/
<?php $querystr = "SELECT * FROM $wpdb->posts"
<?php $pageposts = $wpdb->get_results($querystr, OBJECT); ?>

// custom loop
<? if ($pageposts) : foreach ($pageposts as $post): setup_postdata($post); ?>

// loop stuff!!!
Number 1: <?php the_title(); ?>

Number 2: <?php echo $post->post_title ?>

<?php endforeach; ?>
<?php else : ?>
// if no posts to loop through
<?php endif; ?>

this custom loop (used in Daiko’s phptextbox sidebar) fails to call the_title() function during each iteration of the loop

the_title() will display the LAST title found in the whole sql query each time.

compare against: echo $post->post_title which displays each post title. but it is very stripped down without all the html formating the_title() adds in.. which is undesirable.

how do i get the_title() to work in this loop?