iBook start up problem,stuck on grey screen.

I have bought a second hand ibook which started up fine when I got it, it just needed operating software installing. My old OS X disc will not install. I am now stuck with a grey screen with the turning wheel. Have tried a new install disc,created from a friend's disc which he put on a web site for me to download and burn, I can't get anything at all from this.

In safe mode I get a blue screen with 2 arrow buttons, one to start (which leads to a grey screen again),and the other a circular arrow which restarts in safe.

Have tried going to the black screen with white text 'mode' and entering fsck -fy and have got the message "hard drive appears to be ok" rebooted from there and still nothing.

Is there another step I should take in this mode?

Does it matter that I changed name of hard drive on my initial start up of computer when it was working ok (albeit without any software installed)

Hope someone can help-I don't think its a lost cause!

thanks

Dave