Selling lion installed imac

I have an iMac I am about to sell, it has lion installed and so far I have been unable to perform an erase and install to put the iMac back to a clean beginning for the new owner, I have tried to do this by reverting back to Snow Leopard but booting from the CD gets no where, then drive spins up apple logo appears then the CD drive goes to sleep, left it for three hours and nothing happened.
How do I clear the iMac and make it saleable?
Lion only reinstalls around the existing system, and it's tied to my iTunes account, this needs to be clear for the next user.

There are two types of Lion licenses:
1. licenses tied to one mac (hardware linked license)
2. licenses tied to one Apple ID (person linked license)
1. transfers, 2. does not.
So the person buying the mac would be "without a paddle" if you hadn't prepared them that they might need to pay to reinstall their OS if their mac ever crashes or gets a new hard drive.
Sell the Mac with the Leopard and Snow Leopard Install discs but without Lion (installed) to save yourself and the buyer from trouble.
Stefan

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Selling lion installed imac

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