As you speculated, this could be a security feature. If a firmware password is set, it can block booting from optical media. It WILL prevent the PRAM from being reset. To remove the protection, you need to do the following:
Force Removing Password Protection

1) Add or remove DIMMs to change the total amount of RAM in the computer.

2) Then, the PRAM must be reset 3 times. (Command + Option + P + R).

Click to expand...

YES! Did as directed, then started up with an original retail OSX 10.4 DVD in the optical drive and --> installed <-- the OS on a wiped hard drive. Ah, the logic board is more functional and life is better.

However, the Sound Preference Pane is still not usable. Most anything selectable and/or variable is grayed out. One can check the box to "Show Volume in the Menu Bar" but the first time one clicks on it it goes away from the Menu Bar. In the grayed out Pref Pane the  volume sliders are set at max but the "Mute" box is checked.

Thanks,

AichEss