Thanks. I tried both the SAFE MODE boot and the Boot From External Drive boot. Both ended with the universal "NO" symbol after the Apple logo was up for a few seconds. The Alt key boot did not show any drives at all. I inserted the OSX CD and tried the Alt Key boot again, and it showed the Optical drive. I selected the Optical drive and booted from it, and got the usual frozen Apple logo after several seconds.
Interesting that it does not seem to recognize a hard drive at all, internal or external, but does recognize the optical drive. I had a loaner Macbook a few days back and did a Target boot with it. It did show the iBook hard drive, so I copied the Macbook OS to it, hoping that would make it bootable....but I continue to get the same results.
Question.....should the machine normally boot up from the optical drive even if there is no hard drive installed? If that is the case, then I am beginning to wonder if the problem is with the optical drive "or" the install CDs.