Tanespimycin and Cytarabine in Treating Patients With Relapsed or Refractory Acute Myeloid Leukemia, Acute Lymphoblastic Leukemia, Chronic Myelogenous Leukemia, Chronic Myelomonocytic Leukemia, or Myelodysplastic Syndromes

Inclusion Criteria: * Diagnosis of 1 of the following: * Acute myeloid leukemia, except acute promyelocytic leukemia (M3 disease), meeting 1 of the following criteria: * Failed to achieve complete remission (CR) after initial induction therapy regimen\* * First relapse within 1 year of initial CR * Failed re-induction therapy at first or second relapse * Second or third relapse after completing ≤ 3 different induction therapy regimens * Antecedent hematologic disorder (myelodysplastic syndromes \[MDS\], chronic myeloproliferative disease, or chronic myelomonocytic leukemia \[CMML\]) * Received prior chemotherapy for a non-hematologic malignancy * High-risk cytogenetic abnormalities (abnormalities of chromosome 5, 7, 8, or 11 OR ≥ 3 karyotypic abnormalities) * Acute lymphoblastic leukemia, meeting 1 of the following criteria: * Failed to achieve CR after initial induction therapy regimen * First relapse within 1 year of initial CR * Failed re-induction therapy at first or second relapse * Second or third relapse after completing ≤ 3 different induction therapy regimens * Chronic myelogenous leukemia, meeting the following criteria: * Accelerated OR blast phase (\> 10% increase in the blast percentage in bone marrow) * Failed prior imatinib mesylate * No more than 1 prior chemotherapy regimen in addition to imatinib mesylate * CMML, meeting the following criteria: * More than 10% increase in blast percentage AND organ infiltration OR impending marrow failure as evidenced by cytopenia * No t(5;12) by cytogenetics (unless failed prior trial of imatinib mesylate) * High-grade MDS, defined as \> 10% blasts on marrow cellularity (refractory anemia with excess blasts in transformation) OR International Prognostic Scoring System MDS prognostic score \> 1.5 * Not a candidate for allogenic bone marrow transplantation\* from a related sibling donor (i.e., HLA-identical sibling) * No known standard or potentially curative therapy exists or is capable of extending life expectancy * No clinical symptoms suggesting CNS leukemia * Performance status - ECOG 0-2 * At least 60 days * See Disease Characteristics * Bilirubin ≤ 1.5 times upper limit of normal (unless attributed to underlying disease) * Creatinine clearance ≥ 60 mL/min * No New York Heart Association class III-IV heart failure * No myocardial infarction within the past year * LVEF ≥ 40% by MUGA * No cardiac symptoms ≥ grade 2 * No uncontrolled dysrhythmia requiring medication * No poorly controlled angina * QTc ≤ 450 msec for men and ≤ 470 msec for women * No congenital long QT syndrome * No left bundle branch block * No ischemic heart disease within the past 6 months * No history of cardiac toxicity after treatment with anthracyclines (e.g., doxorubicin hydrochloride, daunorubicin hydrochloride, mitoxantrone hydrochloride, bleomycin, or carmustine * No other significant cardiac disease * No active uncontrolled infection * No history of serious allergic reaction to eggs * No known HIV infection or AIDS (with or without highly active antiretroviral treatment) * DLCO \> 80% * No pulmonary symptoms ≥ grade 2 * No symptomatic pulmonary disease requiring medication including any of the following: * Dyspnea on or off exertion * Paroxysmal nocturnal dyspnea * Significant pulmonary disease (e.g., chronic obstruction/restrictive pulmonary disease) * No oxygen requirement * No home oxygen that meets the medicare requirement * No history of pulmonary toxicity after treatment with anthracyclines (e.g., doxorubicin hydrochloride, daunorubicin hydrochloride, mitoxantrone hydrochloride, bleomycin, or carmustine * Not pregnant or nursing * Negative pregnancy test * Fertile patients must use effective contraception * No psychosis * No other serious underlying medical condition that would preclude study participation * No prior allogeneic or autologous bone marrow transplantation * No concurrent immunotherapy * No concurrent biologic agents * No concurrent gene therapy * See Disease Characteristics * Recovered from prior chemotherapy * At least 48 hours since prior hydroxyurea for prevention of leukostasis * No other concurrent chemotherapy * At least 48 hours since prior glucocorticoids for prevention of leukostasis * No prior radiotherapy that included the heart in the field (e.g., mantle) or chest * No concurrent radiotherapy * No concurrent drugs that may cause QTc prolongation * No concurrent participation in another clinical trial involving a pharmacologic agent for symptom control or therapeutic intent * No other concurrent investigational drugs or therapy