Indigo iMac spits out OS 10.2 installer disk

I recently got this Indigo iMac. It has OS 10.0.4 as the operating system. I got an Apple OS 10.2.4 installer DVD. Everytime I put the DVD into the slot, the computer spits it out. I've tried restarting the computer holding down the C key. It still spits it out. I know this machine can be upgraded, but how??????
If anyone can shed some light on this, please tell me!
Indigo iMac G3   Mac OS X (10.0.x)  

Some Indigo iMacs didn't ship with an optical drive capable of reading DVDs; if your computer is one of these and you bought the Mac OS X 10.4 retail package, use the media exchange program to get Mac OS X 10.4 on CDs. If you bought a DVD containing a previous version of Mac OS X, it is model-specific and won't work on your machine.
To tell what kind of optical drive your computer has, open the Apple System Profiler in the /Applications/Utilities/ folder and look at the hardware information.
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