And, conversely, if OS 9 drivers were not installed during the re-formatting and installation of Panther, the iMac cannot boot from any flavour of OS 9, let alone earlier OSs. The drivers must be installed when formatting is done. There is no installation of OS 9 drivers possible post hoc. Can you boot from Panther's Install 1 CD?
You are in the position now of needing a functional CD-ROM drive, preferably in the iMac, but an external FireWire CD-ROM can be used.
When that is installed, check that the CD drive makes audible CD-spinning noises with a CD inserted. Reset the Mac's PMU. Remove the mains cable and the PRAM battery. Check that the battery has no less than 3.3V available (preferably while it is in-circuit), or be ready to replace it with a known-new battery, regardless. Wait 20min. (overkill, but certain). Re-install the battery. Press the PMU switch on the logic board once, and once only, ie don't let it bounce, or that will count as two presses, for about 2sec. The PMU is a computer-within-a-computer, and very, very finicky. Close the Mac. Start up, with only the keyboard and mouse attached. Zap the PRAM immediately, and allow three further startup chimes before releasing the four-fingered salute. Immediately insert the OS X CD and hold down the c key to force the iMac to ignore the hard drive. If the iMac does not boot from the CD (it will take a while, so don't release the c key before the grey screen appears and the gearwheel spins), use the restart (triangle) button below the modem port and hold down the option key to see whether the CD is 'seen' as having a bootable OS that you can select as startup. If that doesn't happen, you may have a good idea why the iMac was in the garbage.
If the iMac gets through POST without beeping at you (as it apparently does), there should be no RAM problem. It's either just confused about where to find an accessible and valid start-up volume because you haven't provided one yet, or the logic board is playing FBs.
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