IMac refuses to allow OS install --trying to reset iMac

I want to reset an iMac back to the original state before it was used.
Things I have tried include :
At startup pressing C and booting of the DVD Installation
Result: screen freezes with Apple logo waited 15 min before restart
Changed boot sequence using the DVD Install Utility program to boot the CD
Result: Apple logo with 'moving gear' then choose Utility, then OS reset got one of two messages
- nice format stating A new OS could not be installed or
- a bugfix dump requesting a hard reboot...
MACs are new to me but I thought I could wipe out an existing HD and reload the OS. So far no luck,

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