IMac won't boot, hangs on white logo screen and wheel stops spinning

I have a 4 year old 24" iMac - 4GB RAM, Lion 10.7.3 - that froze up in the middle of opening a PDF file in preview.  I powered it off by holding in the button only to discover it will not restart.  It gets as far as the white screen with the Apple logo and the "spinning" circle of lines and the this stops spinning after about 15 seconds and it will not do anything else.
I have tried:
resetting the SMC
resetting the PRAM
Booting:
with only keyboard plugged in
in safe mode
from USB (Lion) Recovery thumb drive
from MBP in target mode
from Time Machine backup
from Leopard and Snow Leopard DVD's
In all cases with the boot the HDD is shown along with the other drive(s) connected and I can select these other drives but the result is always the same.  In safe mode it just hangs after going through everything.
As the iMac isn't under warranty I decided to swap the HDD out with a 1TB working one from my old (deceased) Time Capsule.  I know this drive still works.  Still the same problem though.  Whilst the imac was apart I checked the onboard CR2032 battery was OK and for any obvious board problems.  Nothing.
I haven't been able to find anything that relates to not being able to boot of an external drive from searching the web and I now conceed this is most likely a board level failure.  I haven't lost anything as I backup routinely.  My intention was to upgrade when the next model iMac comes along, just wish it ends up being very soon as my MBP is not great for editing photo's.
If I could get the iMac limping it would help whilst I wait for the next generation iMac, so if anyone can help it would be appreciated.

I have a 4 year old 24" iMac - 4GB RAM, Lion 10.7.3 - that froze up in the middle of opening a PDF file in preview.  I powered it off by holding in the button only to discover it will not restart.  It gets as far as the white screen with the Apple logo and the "spinning" circle of lines and the this stops spinning after about 15 seconds and it will not do anything else.
I have tried:
resetting the SMC
resetting the PRAM
Booting:
with only keyboard plugged in
in safe mode
from USB (Lion) Recovery thumb drive
from MBP in target mode
from Time Machine backup
from Leopard and Snow Leopard DVD's
In all cases with the boot the HDD is shown along with the other drive(s) connected and I can select these other drives but the result is always the same.  In safe mode it just hangs after going through everything.
As the iMac isn't under warranty I decided to swap the HDD out with a 1TB working one from my old (deceased) Time Capsule.  I know this drive still works.  Still the same problem though.  Whilst the imac was apart I checked the onboard CR2032 battery was OK and for any obvious board problems.  Nothing.
I haven't been able to find anything that relates to not being able to boot of an external drive from searching the web and I now conceed this is most likely a board level failure.  I haven't lost anything as I backup routinely.  My intention was to upgrade when the next model iMac comes along, just wish it ends up being very soon as my MBP is not great for editing photo's.
If I could get the iMac limping it would help whilst I wait for the next generation iMac, so if anyone can help it would be appreciated.

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