iMac only starts in Safe Mode

Hello there,
First, here are my iMac's specs:
Model Identifier: iMac5,1
Processor Name: Intel Core 2 Duo
Processor Speed: 2.16GHz
Number of processors: 1
Total Number of cores: 2
L2 Cache: 4MB
Memory: 1GB
Bus Speed: 667MHz
Boot ROM Version: IM51.0090.B09
SMC Version: 1.9f4

Hopefully that's enough information (I'm not the biggest computer guru).

My iMac hasn't been running very well for awhile (crashes, freezes, slow, etc). I thought uninstalling Fan Control (downloaded, not originally part of computer) would maybe help. After I uninstalled it, things really got messed up. It took several start-ups to actually get into the system and the screen has horizontal lines and what appear to be dead pixels. I was able to reinstall Fan Control, but that still didn't help.
After that, I decided to back everything up, erase the harddrive and start fresh. I first tried reinstalling OS X 10.4.7 (the original disk that came with my computer). The computer still kept crashing, so I held down the power button and restarted in Safe Mode. I was able to reinstall OS X, so then I tried reinstalling Leopard. The same thing happened, and I had to start-up in Safe Mode.
Below is a list of things I tried (I did a lot of Google searching):

Repair Disk with Disk Utility from start-up disks (both Leopard and the original disk)

Reset PRAM (I'm not sure if I got this to work. I followed what the forums said, but still no luck)

Clear out start-up items (there was nothing in either folder)

Ran Apple Hardware Test (it didn't find any problems)

I tried starting-up normally again and the little grey circle with a line came up. Now I'm only able to start up in Safe Mode.

Any ideas on what I can do?

Could be numerous things going wrong there, but certainly sounds more like a hardware problem rather than a software one.

1: Could be a bad HDD that's dying on you, not too much too replace and could solve the problem.

2: Could be bad RAM at the root cause and also not too expensive to replace.

3: Could be a GPU problem which is a lot more expensive and not really user-replaceable, you would probably want to get to an Apple store to get this fixed.

Hope this helps a little

- Simon

Thanks a bunch (such a quick reply). Is there an easy way to figure out what the hardware problem might be?