How do I Format new Hard Drive?

iMac "Core 2 Duo" 3.06 24-inch (early 2008)

This is my first try with an iMac, helping a friend replace the hard drive... I usually do PC stuff..

I followed the instructions and replaced the Hard Drive in the iMac with a Western Digital 1 TB Desktop SATA drive. It went in flawlessly. Now I need to FORMAT the new HD. Can someone give me step by step instructions on how to do this? I have tried and tried to find the screen pull down to get to the disk utilities...without success. I put in the Mac OS X install Disc 1 and held down the C key... which brings me to a screen with the apple logo and a rotating circle below, nothing else... How do I get to the disk utilities? I have gray disk OS 10.6.4 and OS 10.5.4 . We ordered Snow Leopard from Apple Store and should have it tomorrow..