dinesh,
I misread your specs on your powerbook; you have the Pismo (as stated in your subject line) and not a Lombard as I stated. This won't make any difference regarding your problem, but there is one additional startup procedure you can try that the Lombard lacks. When restarting to boot an optical disk, press the 'option' key, not the 'c' key; this will bring up the Startup Manager. You should see your HD icon and also the CD or DVD icon; select the optical disk and click the 'forward' or 'continue' arrow.
If the CD or DVD is not in the Startup Manager window, or it won't boot to the optical disk, you probably have a failed optical drive. You can try what Tom suggests and see what happens.
If you have another Mac with built-in FireWire ports and which supports the OS you are trying to install on the Pismo, there is another way to install the OS on your Pismo.
Please post back if this a choice you have and describe what other Mac you have.