After 3 imacs and several self repairs.
This is Most DEFINATELY a hardware issue. And PLEASE DO NOT TAKE APART YOUR SCREEN!!!. I've done it more than once... Let me explain:
FIRST THE EASY STUFF.
1. The smudges that are a problem are NOT located between the glass and the LCD which is easliy removed with a suction cup or two. and a bit of windex will clean that area in about 5 minutes... THIS IS NOT THE ISSUE.
2. Taking the screen out as if to replace a hard drive is fairly easy and there are instructions online to do this.
3. Cleaning the interior of your iMac is not too bad if your a little techie and VERY CAREFUL.
4. Cleaning a few pressure points or smudges between the LCD and the FRONT protective glass is easy HOWEVER if you leave even one little piece of dust or a streak of glass cleaner it will drive you insane.
5. 1 caviot. if you twist the screen when you take it out. you can permantly destroy it just because the little ribbon cables around the base of the glass are brittle from heating. Sometimes just disturbing the screen to change the hard drive will ruin it.
NOW to the core of the HARD STUFF
1 Mac Anatomy 101: There is a magnetized front protective glass cover. Then there is a LCD/LED screen underneath that. Once you unscrew the edges and remove all the ribbon cables it comes out in 1 piece.
This exposes the hard drive, mother board and fans and filth. inside the machine.
a. The SCREEN: In order to repiar these issues the actually internal screen must be disembled. This is normally done in a clean room. They are NOT DESIGNED TO BE TAKEN APART AGAIN...The actuall screen is made up of several layers. There is a Power supply/controller on the back of the screen. Then there is a metal box that contains a bunch of Ultraviolet lamps about 1/16th of an inch thick which will break if the screen is bent or twisted during dissembly. There is then a white ribbed light difusser which smooths out the light from the lamps so you don't see individual bright lines from the backlights.
There is then a polorizer/silver reflector/diffuser kinda piece of plastic. and Finally there is the actually LCD/LED glass. All of this is sandwiched together with a plastic spacer metal tape, regualr tape and sometimes sealed edges.
2. The PROBLEMS:
a. Dark smudges sometimes grey sometimes brownish. Ultra find dust and smoke particles are between the LCD and the the 1st layer of plastic. These can be cleaned off once the screen i dissembled.
b. Dark yellowed lines horizontally across the screen. These are yellowing on the Ribbed Difusser due to heat from the lights and power supply. This is not repairable. This yellowing can be removed a little with an anti-oxidizing agent like the lens cleaner for headlamps and A LOT OF RUBBING... be careful this difusser is brittle and will crack easily and then you're screwed.
c. Dark Hazy Horizontal lines. These are usually also due to smoke/dust particles inside the screen and can be cleaned off with windex or the like.
d. Colored lines and dark tiny 1 or 2 pixel lines on the screen: These are caused by heat and are not repairable. The surface mount ribbon cable that attaches the edge of the LCD are damaged. They can sometimes be re-flowed if you dare heat the heck out of your screen with a heat gun. HOWEVER usually this is a bad idea unless you're really an expert or unless you're really desperate and the success rate is less than 50/50. This often happens after someone like me has tried to clean the screen and even though being very careful has bent the little ribbon cables even a tiny amount (they are brittle and old and damaged due to heat already. sometimes just touching them will cause the problem.
e. banging on the screen or Twisting the screen from by grabbing the corners causes little lines to appear or disapear. Same problem as d. above. Your on your way to a permantly destroyed screen... hang it up and cry.
OK there you have it...
Good luck folks and never ever buy an imac older than 2 years or so... The problem will appear in almost all imacs after the 3 year point. imacs have been plagued with problems from day 1 due to heating and this.
That being said. I love them and continue to buy used ones for great prices on ebay. The smudges are not a problem that will destroy your mac. They are just ugly. If you leave it alone and deal with the discoloration you will be best off and your mac will probably last 5-7 years. Or sell it on ebay to a fool like me 🙂