Hi again, Thanks for getting back.
Not good news I'm afraid. When DU reports that the volume cannot be repaired a third party repair utility is called for.
Disk Warrior is the one most commonly recommended on these forums,
TechTool Pro is another.
Like DU's Repair Disk, these repair utilities cannot be run from the boot disk and have to be run either from another bootable Mac OS X installation, i.e. another computer/partition on an external HD, or the Utility CD used in the same way as the OS X install disk.
If you don't want to go that route the alternative is to create a comprehensive back-up of your files to another medium - an external HD would be needed here otherwise you'd need
a lot of CDs - and then to use the install disks to zero overwrite/erase your iBook HD and reinstall everything.
Whichever route you take, or even if you choose to carry on as you are, I sincerely recommend that you still back everything up to an external. As the OS is damaged a clone wouldn't be a good idea at this stage but once the problems are sorted that would be the way to go.
You also need to know that, with only 7 GB free, you are running at the bare minimum for free space. 15% is the usual recommendation. If you have been running with much less than 7 GB that could well have been the cause of you current problems.
Long term I think you need to consider getting a larger internal HD. The lifespan for notebook HDs is 3-5 yrs, your current HD could well be living on borrowed time. iBook compatible HDs are not expensive, the fitting isn't straightforward, but is doable DIY. (I've done it, with no prior computer tech experience whatsoever) Or shop around for a supply and fit from a reputable Apple mechanic.
My own replacement is a PATA Hitachi 160 GB; Western Digital are also frequently recommended. Currently 250 GB is the largest PATA laptop drive available.
Good luck, and post back if you need any more info, advice or guidance.
Adrian