I don't  want to buy a new one just yet hoping for some magic

Hi folks my 4 year old imac 20" I believe died on me. I can't believe it. I read everything there is to read, bad caps, bad PSU caps, apple warranty extension. Mine falls within that serial# but apple folks said no it's 4 years. $1799 for 4 years of service just not right. I'm using a 8 years old Win laptop to type this. All was going well till from sleep the imac sounded it was ready for takeoff. I did a hard shut down. (it would not wake) I tried everything but she won't boot. Actually it has booted on occasion but after a while would hard freeze. Followed by hard shutdown, then not booting. During the no boot fans will blast after some 30 second or so. So I take the cover off to start troubleshooting. Apple says its logic board problem. There is no way I'm paying $900 for a new board. I see nothing in the caps that would indicate to replace them. PSU is also fine based on the LED code. LED1 and LED2 light up, so that indicates PSU is working correctly. Its LED3 that will not turn on. I took out the inverter to inspect and again it looks brand new. No smells, burnt sightings, kinked wires....nothing. When it booted I did all the reset key stuff, didn't help. One note before it booted it beeped once. After that beep, I know it will boot. I'm not sure what that beep means. I can't get it to beep again. No chime or bong. However the power light will stay on sometimes or not turn on at all while not booting. I disconnected the ambient sensor, hoping that would do it, and no. Other things I've done is upgrade the HD and memory a while back. I don't believe its an issue cause these were working for a few months before hand, and I put back the original working 512K dimm to test, and all is same.
Here are my questions.
1. What else can i check?
2. How to test the inverter to make sure it works correctly? I'm hoping its that.
3. Can the power light have anything to do with it sensor there maybe?? I know I'm reaching here..
I'm just hoping someone can give me other clues. Like I said 4 years for $1800 is not right. One disturbing thing is apple thinks I got more years then I should have with it. Sorry, I like apple but totally disagree on that. If someone had told me that when I bought it, I would ran the other way real fast.

carl s. wrote:
I read everything there is to read, bad caps, bad PSU caps, apple warranty extension. Mine falls within that serial# but apple folks said no it's 4 years.
Are you sure about the serial number & warranty extension? To my knowledge, it was only first generation iMac G5's involved in the 'bad cap' warranty extension & yours sounds like a 2nd generation one (the Ambient Light Sensor version).
As it happens, I have been having similar problems with my iMac G5 ALS model, also about 4 years old. (Note: you may want to skim the next several paragraphs, which describe it in detail, & focus on the conclusion at the end.)
First, for several months it would sometimes not wake from sleep from the keyboard. When this happened, plugging & unplugging the keyboard USB connector would sometimes wake it, then the problem progressed & that wouldn't work but unplugging or plugging in an iPod Shuffle would wake it. Then it got to the point that it would go into a weird 'half-sleep' mode -- everything seemed to be sleeping & the screen was dark but I could hear the fans & hard drive running & the power light was not pulsing but off. At that point not even holding down the power button would do anything but pulling the power cord & plugging it back in would shut the computer down, after which it would start & run normally.
This went on for about 2 weeks, then the display started having persistent artifacts consistent with bad video RAM -- the pointer was surrounded by a hatched pattern, windows by multiple horizontal lines, & Dock & menu bar were overlaid with a grey window-screen-like pattern. Booting into Target Disk Mode or the Apple Hardware Test resulted in vertical broken lines throughout the screen & sure enough, AHT said everything was OK except video RAM -- I couldn't read the result code because of the vertical lines.
This iMac was just being used at the time by my wife for email & she gamely said she could live with the display artifacts, since email windows were displayed cleanly, so for about 10 days that's what we did, pulling the power cord as needed to get the Mac out of its weird 'half-sleep' mode when that occurred. I had & periodically continued to try resetting the SMU & PRAM, emptying caches, etc., & running Disk Utility's Verify Disk check, all to no effect.
Then 2 days ago, I noticed the weirdest behavior yet: the iMac appeared to be sleeping (power light pulsing) but an attached iPod Shuffle's light was flashing orange, indicating it was mounted & should not be disconnected. On closer examination, I noticed that the fans were not running but the back of the case was very, very hot. I pulled the power plug & opened the case to discover that the CPU shroud was too hot to touch! Trying the internal power switch diagnostic immediately lit LED 4, the over-temperature indicator so I left the Mac on its face with the cover off to cool down.
To my relief, 20 minutes later hitting the internal power switch resulted in a normal startup chime & LED's 1 through 3 lighting up in the normal way. I closed it up & tried the normal startup but it hung at the grey screen with the spinner. Since this iMac had two partitions, one for Leopard as the default & one for Tiger, I restarted & with the option key selected the Tiger partition.
Amazingly, not only did it start up perfectly into Tiger but there was no trace of video artifacts. I discovered that the Leopard partition now had an unrepairable 'bad thread count' error, even though all previous checks with Disk Utility had shown no problems. I restored the Leopard partition from a Time Machine backup, restarted into it & since then everything has worked perfectly, even to the point that AHT can now find no video RAM or any other problems.
Conclusion: I have no idea what happened or why everything is working perfectly now. It seems impossible that any software change could fix a hardware problem. The persistent video RAM issue occurred even when booting from the AHT & installer discs, which should rule out any problem with the version of the OS installed on the hard drive. I have no faith that this iMac won't start displaying power/sleep/video issues again, but try as I might I can no longer find any sign of any problems.
My half-baked hypothesis for now is that the severe over temperature condition somehow cooked out whatever hardware problem caused it, & in so doing "cured" the other problems, too. This makes almost no sense, except for one thing: I noticed two slightly bulging capacitors on the motherboard that I don't think were there some months back when I last opened the case. A partial failure mode for a "popped" electrolytic capacitor is that this lets moisture into it, partially shorting it out. It is remotely possible that the moisture was cooked out of these two caps & that is why it is working OK now ... maybe.
Anyway, because of this, I suggest that you look very carefully at all the black electrolytic capacitors on your motherboard, checking for even the slightest sign of bulging or separation of the three sections of their metal tops along the Y-shaped score lines. Even if your # 1 & 2 LED's are lighting up, you may have a power related problem caused by these capacitors being bad. If so, it may be that a technician can replace them & get your iMac working again without an expensive logic board replacement.

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