Have you booted with the 10.4 DVD that came with your iMac G5 AND once you get to the Installer, went up to the Utilities drop-down up top and selected Disk Utility? Once there, does the drive show up? If so Erase it. Since it's a Power PC Mac I would go to Partition, Change it from Current to One Partition, then click Options and select Apple Partition Map and hit Apply. Then reboot from the OSX DVD and the drive should show up to install to.
GUID partition is only for Intel Macs so do not choose it. Your DVD that came with the G5 might not have any of those options since it was for a Power PC, but just being sure.
Edit: if that still does not work for you, let us know. One other thing, since that is an older iMac now, it's SATA controllers are SATA 150 and not SATA 300. I have read a few reports of people who had to take the new hard drive out and find the jumper pins and install a jumper to force it to SATA 150 or the drive would not boot.