iMac 350MHz upgrade to 10.3

A guy at work picked up a G3 iMac (350MHz, 7GB, CD) a year ago and finally got around to trying it out recently. It won't load OS9. It just quits 1/4 of the way through. I tried using a copy of OS9 I have but its for a G4 Powermac and doesn't want to boot.
I figured the best solution would just be to install 10.3 on the thing just to get it running for him. I said I needed to do a firmware update.

Am I kinda screwed here because I cannot do a firmware upgrade because OS9 does not work?
Any suggestions on how to make OS9 work so I can upgrade the firmware?

I am not going to put money in the machine for him and he seemed pretty upset having to spend $20 on it recently. I don't want to work too hard because he said I could have it if I cannot fix it.

I'd like to know how to fix it because I'd rather fix it and give it back. But a free Mac to mess around with is tempting. Please help.

Bryan

Being the good guy I am, I won't help you so you can have the free Mac.

Actually, I'd like some help. PLEASE!!

Resetting the PRAM and NVRAM didn't help...
Now that it's officially mine, can I upgrade to any G3 logicboard on my slotloading 350MHz iMac G3? I was thinking about putting in the 500MHz or 600MHz version, slapping in 1GB (2x 512MB) of RAM or so and an 80GB HD or something. I can't find a slotloading CD-RW to replace the CD drive. I can spend like $100 to $150. It should be very possible, right?
Bryan

a few hours of messing around with it this evening...