IMac won't start up passed the grey screen

Last friday my iMac (late 2006, 24", 2.33 duo core Intel, OS 10.6.8) gave me the spinning beach ball.
Restarting resulted in: first the apple screen with the progress indicator, followed by grey screen..
That was it. It hangs at the grey screen.
I've been busy this weekend testing all kinds of ideas to get my imac to fully start up again.
I checked the RAM, it's fine.
I flushed NVRAM, wild guess, but nothing changed.
Starting up in safe mode doesn't work.
Starting up in recovery mode doesn't work.
On the upside, I was able to start my imac up in Target mode. Using the host computer and Disk Utlity I can see there's nothing wrong with the HD. All the data is still there!, so later today I'll make a copy of the complete HD, hoping/thinking that I won't copy whatever is wrong.
I had Disk Utility repair all the permissions.
I've used the host computer to reinstall the OS on my imac.
But on start up my beloved iMac still won't get passed the grey screen.
I'm thinking something goes wrong before my Mac even gets to the HD. Maybe it's the firmware, but I'm not really sure that firmware matters in this case. And I wouldn't know how to reinstall the latest version of firmware because my imac won't start up from it's disk drive
I'm thinking maybe something could be wrong with the graphic card's RAM, though on start up I can see the apple logo just fine.
I'm not able to start up from CD, I've tried that because I wanted to reinstall my OS (before I figured out how to do that in Target Mode) by putting the OS disk in my imac's own disk drive. Staring up with the C key still gets me the grey screen. Staring up with Option key shows no other option but the HD.
So is there anybody out there who has an idea that could help me further along?
Any help is greatly appreciated!
Frank

Hi Jan,
If you have another firewire Mac you can check if the HD of your Mac is OK by connecting them with a firewire cable and use target-mode. That way I found out my HD was just fine.
It also offers you the chance to run a diagnostic program to check if anything else is fine. I used TechTool to do that. But everything checked out fine.
In the end I decided the problem is probably hardware. Some electronic part that broke. Very frustrating that some small transistor or so is keeping me from using my otherwise fine iMac.
I contacted a repairshop that also works for the local Mac retailer. They told me my iMac was concidered 'classic' and therefor it wasn't economically not worth the trouble trying to repair it.
I gave up, took two weeks to mourn the loss of my beloved iMac, and bought a Mac mini.
FrankV
Judging by your name I'm guessing I could've anwered this in Dutch.

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