Is an iMac 2.66ghz 2GB RAM, running Mac OS X 10.6.8, a few years old with massive delays fixable?

Question

Is it possible to fix a 2006 iMac 2.66ghz 2GB RAM, SL OS X that gets hot after an hour or so of use, slows down functionality, causing delayed response, frequent disconnecting wireless mouse.  Upon restart shows blinking folder until left to cool down completely and starts again normally?  Could this be a RAM issue (2GB currently) or a Hardrive capacity issue (217GB of 317GB available)?  Is this a sign of a dying computer or is it salvagable?

Answer 1

Backup the computer before doing the following:
Clean Install of Snow Leopard
     1. Boot the computer using the Snow Leopard Installer Disc.  Insert the disc into the
         optical drive and restart the computer.  After the chime press and hold down the
         "C" key.  Release the key when you see a small spinning gear appear below the
         dark gray Apple logo.
     2. After the installer loads select your language and click on the Continue
         button. When the menu bar appears select Disk Utility from the Utilities menu.
         After DU loads select the hard drive entry from the left side list (mfgr.'s ID and drive
         size.)  Click on the Partition tab in the DU main window.  Set the number of
         partitions to one (1) from the Partitions drop down menu, set the format type to Mac
         OS Extended (Journaled, if supported), then click on the Partition button.
     3. When the formatting has completed quit DU and return to the installer.  Proceed
         with the OS X installation and follow the directions included with the installer.
     4.  When the installation has completed your computer will require a restart after
         which you will be running a fresh install of OS X. When you setup your initial
         admin account in the Setup Assistant be sure to use the exact same username
         and password you used on your old system.
     5. Download and install Mac OS X 10.6.8 Update Combo v1.1. You can now begin the update
         by opening Software Update and installing all recommended updates to bring your
         installation current.
When this is completed you can begin to restore your files from your backup.