That's odd! Did you get to the installer to install 10.3? When the install disc is in the computer are you starting the computer while holding 'C' on your keyboard? That will start from the install disc.
Does the startup chime sound when you turn on the computer?
Are the install discs for your iBook? (If they are specifically for another kind of mac, like a mac mini, they will not work on your computer).
Finally, while the power adapter is unplugged and the battery is removed, open the keyboard and remove the Airport wireless card, if there is one. Now remove the metal plate covering the RAM. There are step by step instructions with good photo illustrations for this
here. Remove the RAM carefully and reassemble the computer. Start it up again and see if it will now get past the grey apple screen. (Remember to hold C while starting so it starts from the CD). If it works it means the RAM was either not installed quite right or was loose, or the RAM is damaged and can not be used.
Let me know if any of this helps. If it doesn't, there are a few more possibilities I know of.