one problem after another. need major help with my Imac Intel

well. heres the story so far.

My imac is running lion, and it gets extremely slow, so i do a disk verify, which tells me my HDD is corrupt and needs to be fixed. so inserting a USB drive with the lion install disk on it, i go to disk utility and perform a disk repair, which tells me the HDD is unable to be reformatted correctly and i have no choice but to reformat my entire hard drive. so i do.

so now i have an imac with no OS on it. so i try running a lion clean install off my USB drive. dozens of tries, with error after error, either it just freezes for hours, tell me "unable to download additional packages, or just gives me a big screen saying "an error caused the installation to fail".

so after trying every sggestion online, and going through about 100 guides, I decide it might be that my superdrive is broken. there has been a disk inside of it for about 6 months that REFUSES to come out, no matter what. I guess the ejection gears or whatever were broken. so i decide im going to open the mac, and physically remove the disk. which i just did, successfully.

so NOOWWWW.. i turn the imac on, and the disk drive is still making noises as if its trying to read an invisible disk, and it wont stop. and when i boot my mac, there is a grey screen with no apple logo. i try holding alt, to open the usb drive, nothing happens. tried resetting my PRAM, nothing happens.

am i totally screwed? any advice?

It sounds like the superdrive is properly broken. It still thinks it's got a disc in.

I'd look at replacing the drive, in the iterim, if you're happy opening your iMac up why not disconnect the drive completely.

However, the other issues you describe suggest your HDD is possibly faulty. As even with the superdrive making a fuss the USB install should still have worked ok.

I'd suggest disconnecting the superdrive and re-trying. If that doesn't work I look into replacing the HDD.

iMacs, like MacBook series, use slot loading drives which seem to have a very high failure rate. Any chance under warranty or Applecare?