Reinstalled Leopard, Mac won't read CD/DVDs, Disk Utility won't work, can't install software, no mount

Question

I have an iMac desktop bought in 2008, and reinstalled Mac OS X Leopard 10.5.2. I can see the hard drive and open data on it. However the Mac will not read any CD/DVDs or install any software. I don't care about the data on it and just want to reinstall Leopard or Snow Leopard.

I can see the hard drive but all options under partition and erase are grayed out. The USB drive and externals don't read either.

I've tried:

1. Disk Utility repair and verify permissions. The programs go through the motions saying everything is complete but nothing changes.

2. Hold CMD + S

   mount -uw /
   rm /var/db/.AppleSetupDone
   shutdown -h now. 
   

That didn't work either.

How can I wipe the hard drive without using Disk Utility?