iMac, New HDD, and white screen

I know variants of this question have been asked a lot and I apologize if I haven't found this one yet. Anyway, I inherited a early '06 iMac with a bad hard drive (clicking and ? folder on startup). I replaced the hard drive, put in some new RAM, but the problem persists. If I hold "C" on startup, it looks like it's trying to read the recovery disk, but ejects it and goes back to the ? folder. If I hold "option", I just get a white screen with a mobile mouse. That makes me suspect that I'm just out of luck. I already did the PRAM/SMC resets. Given the inability to go into boot options, does that just point to system failure or are there any other ideas? Thanks

You mentioned a recovery disk. Is it the original install recovery disk that came with the iMac? Can you identify it for us? The reason we need to know what exact disk you're using is that I suspect you don't have the correct one for your iMac. If your iMac is a 2006 model it likely originally came pre-installed with OS X 10.4.X (Tiger). Using the wrong disk will display the symptoms you described.

Thank you very much for the reply.

You're right. I misspoke. I am using a retail disk of Tiger, not the recovery disks that came with the mac.

Doh, the retail of Tiger is PPC only isn't it? No wonder. So I guess I'll get different disks. Will retail Leopard/Snow Leopard work or do I specially need recovery media? Also, just to reiterate, it's consistent with an incorrect disk that it won't show anything for boot options?

The Tiger retail disk should work. That leaves the optical drive in your iMac as suspect. Buy a can of compressed air and blow a few short blasts in the drive slot. It could just be dirty since the machine is 7 years old. If that doesn't work, you may have to buy an external disk drive to use with the iMac.