... Ouch.
Just to confirm, your iMac is one of
these?
The mach_init errors is bad juju, it does sound like the OS itself has become scrambled. However, the posting about RAM being the initial culprit does strike me as being more than probable.
The discs supplied with the machine would have been 10.2.3 according to the specs page (so at least you have the originals), and whilst there's a slight fudgy with the fact it has 10.3 on it (the upgrade from 10.2 to 10.3 is not a free upgrade) should not interfere with the ability to run 10.3.9 ... your machine should comfortably run 10.4.9, if you were to purchase the upgrade, so the comment about "that the reason the mac wont read my old OS CD is because a newer OS is installed" is just so much flim-flam.
And speaking of flim-flam, the comment that "your superdrive only reads -R" is smoke ... the drives in those can only
write to DVD-R, but should, by rights, be able to
read DVD+R, and if memory serves, read DVD-RW as well.
Now that I think on it a bit more, the likelihood that bad RAM being the culprit here grows more and more. If one RAM module was being 'iffy' then it would interfere with the smooth running of OSX ... it would also interfere with the reliable accessing of storage media, both your optical drive and hard drive. On top of that, if you attempted to do some form of firmware update to the optical drive, and the dodgy RAM corrupted the driver in mid-transfer, it would kill your optical drive outright, with very little chance of recovery. The fact that it does not respond to C-on-boot could be corrupt firmware in the optical drive, or it could also be dodgy RAM from stopping the machine from completing its tests far enough so that it can do the optical boot.
That said, there could be one of a number of other faults that could cause all of the problems you've encountered (bad CPU cooling springs to mind, or a thermal problem with the admittedly tiny motherboard, to name two) but I'd put my money on bad RAM being at the heart of your woes.
If I were a narky kind of person I'd take it back to the seller and demand a fix at their expense, but ePay being ePay you don't really have a lot of recourse when things go wrong. The fact it is advertised as "ex lease" implles you bought it through an ePay Shop (as opposed to a private sale) which means you should be entitled to some form of buyer protection I think, at the very least you might be entitled to a refund ... but you'd have to check with eBay GmbH and go through the rigmaroles of their dispute process. That gets gnarly, real quick ... but the very least you can do is to give the seller negative feedback.
Your machine really needs to see a competent Mac doctor, and soon. I'm in eastern Melbourne, but I cannot get around much otherwise I would offer to visit and see what I could find out and maybe fix. If you could get it to me I'd have a look at it for nix, but Geelong to Burwood is a fair haul ... there are other roaming Mac technical services around Melbourne (such as MacMate and MacMedic) but you'd be paying a pretty penny to have them drive south to see you.
Hope this lengthy waffle was of some small help ...
Brains
First iMac, and OS X is Corrupt! >_< Help?
Damn.
