Can't delete a self-assigned IP address...

Hi folks,
I am using an circa 2005 iMac G5 PPC desktop with 10.5.8. I am trying to connect the iMac to my Time Capsule via ethernet cable, but seem to be having problems with my ethernet card. When I plug into the TC ethernet port, the TC drive, does not mount and I cannot access the worldwide web.
When I go to System Preferences --> Networking, the tab on the left for ethernet connection shows a green dot, says "self-assigned IP" and the status says "connected" PRIOR TO CONNECTING THE ETHERNET CABLE TO THE TIME CAPSULE. It shows a "self-assigned" IP (DHCP selected) of 169.254.69.249, even though I know my TC is 10.0.1.1.  Turning the ethernet off then back on, renewing the DHCP lease, nothing seems to be able to make this 169 IP address go away. The wireless connection to the TC is just fine... everything does what it should, I just can't get the ethernet cable connection to work.
Out of curriosity, I went to the System Profiler, and on the network tab it shows ethernet IPv4 169.254.69.249 (name en0).
I know it's not the Time Capsule, as I connected my laptop to it just fine via ethernet. The TC was IP 10.0.1.1 and it assigned 10.0.1.5 to my laptop (I have a variety of devices on my network), and I was able to transfer data and access the internet with no issues whatsoever.
I live in an 32 story apartment with a built-in ethernet network and ISP included in my rent. It's pretty nice, high speed. I connect from the wall to the Time Capsule via ethernet (circle dot connection port, so I know I have the right port), and then wirelessly out to a couple of laptops, a couple of Airport Express, and of course my desktop.
Bottom line, I think the ethernet card on iMac G5 desktop has gone bad: A few questions:
(1) Any ideas what may be wrong? Has anyone seen this self-assigned IP thing that won't go away?
(2) Any ideas how to fix it?
(3) How much will it cost? It may be time to replace my 6-year old desk top computer.
Thanks, Andy

same problem here.  My biggest gripe . . . why isnt there a response from apple to this weeks old problem!!!!  Do a google search for this problem . . . . thousnads of hits!!!   *** apple!!??  Fix this dang problem!
brand new imac!!!

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