G4 won't boot up for new Mac user

Hi guys. Brand new to Apple computers as I got a "defective" G4 from my neighbor. He was going to throw it away but I told him I would try to fix it first.
When I power it up, it makes a musical "greeting" power up sound and the monitor goes from dark black (as in "off") to a lighter gray, and then a folder appears in the middle of the screen alternating between a face and a question mark.
Does anyone know what is wrong with this computer so that I can repair it for future use? I am guessing a hard drive malfunction, but do not know for sure. And is it worth fixing? FYI - I do not have any software for this system.
Thanks for any help you can provide!
-Mark

A 160g hard drive would run you about $70, while OS X would run about $120.
It would be great to borrow a copy of the os installation disk and boot from it to see if the computer has further problems. Do you know any other mac users? It would also allow you to see how much ram is in the machine (OS X likes ram) and that may be a further expense if you need more.
What are you going to use the machine for? That's the main question as to how much you should spend to fix the machine up. I don't know if it would be fast enough for you as an everyday computer, but internet use, word processing, ITunes, IPhoto would all work just fine. You won't be doing any gaming or heavy duty video processing.
I'd talk to them at the Apple Store, explain the situation, maybe they might be able to help given the situation. They've got a chance here to nab a new mac user, I'd think that may help your case.

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