How to reset factory setting on iMac 2007
How do I reset for iMac 2007 so I can past it on with holding any of my info?
Use the original discs that shipped with your Mac. Erase and install the system it shipped with.
What to do before you sell, give away, or trade in your Mac - Apple Support
If you no longer have the original discs, you can order Snow Leopard DVD which will work: