Before assuming something is wrong with your drive here are a few facts about booting you may not already know:
1. Macs can only install from operating system disks that came with them and newer retail versions of the operating system. That means Upgrade Disks* (please note the exception at the end of the document) and system specific disks that are for another Mac model or vintage of Mac, and older operating system utility and installer disks will not boot those Macs. To learn which operating system your Mac came with, see this article:
2. Some Macs may have difficulty booting holding the 'C' key, and instead work better with the Startup manager as described in this article:
3. Retail operating system disks that are too new for the Mac won't boot either. Check the Apple Spec Database to find out if there is a limit on your Mac model:
Some may require an extra utility called XPostfacto to boot newer operating systems:
4. Third party peripherals and upgrade cards may make it difficult to boot a disk. Only Apple and MacAlly keyboards are known to support booting keyboard shortcuts used for Mac startup. Try to make sure your computer's peripherals have up to date drivers installed before using those installer disks.
5. Mac OS 9.0.4 and earlier will not boot Mac OS X installer disks directly, and need to be upgraded to 9.1 or later to update the Startup Disk control panel:
In addition, those Macs may need a firmware update before even attempting to install Mac OS X 10.2 or higher:
6. Macs with a dead clock (a.k.a. backup battery) battery may have difficulty booting disks:
lists which models have a battery which may need replacing. If the Mac's battery hasn't been changed in over 3 years, suspect this as a possibility.
7. Third party burners and optical drives may not be able to boot the machine. Find out from http://www.xlr8yourmac.com/ if this is a difficulty which can be patched, or if a different drive is necessary.
8. There have been cases also where the BootX file gets corrupted on a Mac OS X system and needs permissions repaired to fix startup issues. Go to Applications -> Utilities -> Disk Utility -> select hard disk in Disk Utility -> click First Aid -> click repair permissions to see if this helps.
9. Firewire and built-in SCSI connected drives are the only peripherals that will boot Mac OS X. USB peripherals can't boot Mac OS X, but can boot Mac OS 9, when Mac OS 9 booting is possible on the Mac model. Firewire drive booting is only possible on Mac models which support target disk mode as target computers:
* The exception to statement number one is Macs released from October 8th through 25th 2003 can boot off of the Upgrade disks for 10.3 (Panther) and use them to upgrade an already installed 10.2.7 or 10.2.8 on the Mac.