All users GONE except for "Other"...and CANNOT boot from External DVD drive

Question

I booted the iMac (Intel...the last one with the White Bezel) tonight, and all of my users were GONE except for "Other." The internal Superdrive has had a disc jammed in it for months, so instead I have an OWC external USB/FW400/FW800 DVD drive. Snow Leaopard.
I need to boot from the SL install disc, but that must go into the external drive...which, as it's been since I upgraded to SL, the Mac sometimes sees and sometimes doesn't. Right now it can't see it. Which leaves me a big pile of crap, doesn't it?
So, what to do? I can't boot the internal drive because it's jammed with a DVD (or I spend $300 to replace what should be a $20 optical drive in it), I can't boot the external DVD drive because the iMac w/Snow Lepeord can't see it, and, meanwhile, all of my photos, etc., are on my Time Machine backup drive...which, as long as I can't do any of the above, just sits there...useless.
Can you tell I'm a bit frustrated with this?
I've reset the PRAM. I've rebooted. I've held down all sorts of combinations of keys. I've tried every single interface type on the external drive and the same thing - the drive can't be seen by the computer.
Has the internal hard drive failed? Nope. I'm tying this using the Firefox browser that's running on my Windows XP installation via Boot Camp on the internal hard drive.

Answer 1

Thanks, but no luck so far.
I have an old iMac G3 downstairs, and I connected it to the machine via Firewire. I could see the disk on the 24" iMac, its folders, etc. I wanted to see if I could install OS X via Target Disk Mode from the old machine to the new one, but it's a PowerPC machine and you can't do that. Maybe you can't do that from ANY iMac...I'm not that experienced.
Now the iMac isn't booting at all to Windows via Boot Camp - it's been booting for 45 minutes now with the "WinXP" logo, but nothing. I'm about to throw it in the car and haul it over to my parents, who have both a Powerbook and a 27" iMac. Maybe it'll work there. Who knows.
Other ideas...replace the internal hard drive (cheap)...if that doesn't work, I'll just sell the thing. I'm not going to sink $300 into the thing when I can get a new machine for around $600-$700. I may go to a Windows7 machine on the desktop and a Powerbook...maybe even an iPad.
I really want to love this iMac. It's my first (well, I did have the G3, but that was just to play with) Mac. It's given me a ton of problems since I bought it new. It's always been a "stock" machine - nothing weird done to it. I was hit with an iMovie update once, and that broke iMovie. Even the new iLife 2009 didn't fix it. Then, the internal optical disk drive failed. I couldn't believe that Apple used a proprietary optical drive rather than a stock Pioneer model. Price for the drive alone? $200.
I installed Snow Leopard 2 months ago, and that completely broke my ability to use external optical drives. Sometimes they work...most times they don't. This is an ongoing problem that many people are having (check the forums)...but no fix. Where does that leave me? With a useless computer.
So, I've boiled it down to this: I love the Mac software. I hate the hardware. Sure, it's pretty, but if something goes wrong, get ready to pay. I hate that Apple knows about problems, yet does nothing to address them, like the problem with external optical drives and Snow Leopard.
I bought the Mac because I was sick of Microsoft not being able to simply produce an OS full of security holes. Often times I read people bashing supposed "driver ****" with Windows, but look at what users of Windows machine are demanding of Microsoft - "please make my software compatible with the trillions of combinations of hardware that can run the os...all the way back to stuff that was created in the mid 1990s." Meanwhile, from my experience, Apple can't get their software to work with their own proprietary, supposedly vertically-controlled hardware.
Windows7 is a not bad OS. It's got it's faults, of course. But, if my optical drive failed in a Windows box, I'd have it replaced in 10 minutes...with a bluray drive...that can write...for under $100.
I use my computer for pictures, etc. In fact, we were ready to send off to iPhoto for our yearly photo books. That's not going to happen, as the photos are forever trapped on my Time Machine backup drive (lesson learned: dump photos to a generic format...fat32 works...just in case you decide to switch from Mac to Win7). iLife is great. MS Office is great, too, on the Mac. I love the little things the Mac does right.
After years of screwing around with my Windows box, I wanted a computer that acted like a consumer electronic device. That's not what I've gotten.
Ugh, so now do I buy a Mac Mini for $700, a new iMac for $1,400, or a Macbook Pro and a mac mini?
...or...do I continue to work within this silly Ubuntu Linux world?
Whatever the answer, I wish I didn't have to ask the question now.