Trying to load OS X on iMac that has another OS on it. Volume not showing u

I recently purchased this iMac on eBay:
http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&ssPageName=STRK:MEWNX:IT&item=1302 66706335
As you can see from the description in the auction, there is another operating system loaded on the computer, not an Apple OS.
I figured no big deal, I will install OS X as soon as I receive my computer.
It arrived yesterday and when I tried to load OS X, right when you get to the part where it says choose destination volume, nothing shows up. I'm assuming that it's because there is another operating system loaded on there entirely, but how on earth can I get passed this? I really don't want to be stuck a.) taking it to Apple and pay them to do something that I can do (loading the OS), or worse, b.) be stuck with this awful Linux operating system that is installed on there already.
Does anybody have any advice on how I can get passed this? I'm desperate.
Thanks!

I have a question regarding the install on another machine using target disk mode.
My eMac apparently isn't reading CDs when loaded in the tray. Lovely. I need to do a fresh install of the OS and since it can't read the CD, can I do this via target disk mode?
I am using the eMac as the host, and the iMac (recently did a fresh install, as you know) as the target computer. I loaded the install disk in the iMac machine and when I rebooted everything, I can't see where the disk would be mounted on the host machine (eMac).
You were saying that this can be done—although not recommended—so, am I looking in the wrong spot for the CD from the iMac's HD?
Thanks (again).

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