iMac Newbie - Problem with startup

I am a newbie on Mac's. I work on Windows Based PC all the time.
I am looking a my daughter iMac a Model A1200 built in 2006.
The problem it is having is when you push the power on button you get white light in the lower right hand corner the Apple logo come up and the pin wheel just turns. Then after awhile they both will go away and nothing but a gray screen.

My daughter said she changed the HD because of the same problem.

Can someone give me some troubleshooting steps to take?

Should I try to boot from the gray os disk that came with the iMac?

Any help will be appreciate.

First try booting from the gray DVD that came with her iMac. Run Disk Utility from the DVD and verify the hard drive. Repair errors if any.

I suspect that it could be the hard drive again that's acting up. If she just changed it out recently it could still be under warranty.

Please Help...

Ok I turn on the iMac and put Disk1 of the Gray CD's I restarted the iMac by pushing the power button until the iMac shutdown then pushed the power button on and held down the C key. The iMac started up and I got to a point where I got the colored spinning wheel and the system justs hang there with no indication of files being copied to the HD. What kind of indication should I get if the OS system is being copied on the HD?

I will go up to bestbuy and get a new HD tonight to install to see if that changes anything.

When it starts up I get the chime the apple logo and a gray spinning wheel then after a while the apple logo and the spinning gray whell disappears. The wireless mouse will put an arrow on the gray screen. The fans come on you can her the cd drive spinning not sure about the HD spinning.

also, can you tell me how to get the CD out of the drive bay since it does not have an eject button.

Thanks

Ok Last night I got it to boot to safe mode very slow. I ran updates still will not boot normally. I am going to change out the HD and load fresh OS X to see if that makes a difference.

FIXED: Bad video chip

I sent the logic board out to be repair. The technician found the video chip bad on the logic board. The IMac has been shipped back to me should se it on Monday.

FIXED: Graphic Chipset Repaired

I sent the IMac to a repair shop to have them take a look at it. The problem was with the logic board graphics chipset. It suffered heat damage. The previous owner extensive playing the video game called WoW for hours. Anyway it up and running like new.

DBarnwell