You say you don't have the Mac OS X 10.3 Install CD. If you are running 10.3.9 and trying to repair the hard drive with an earlier software CD, it won't work. You need to be repairing from the same Install disc as the version of the OS you're running.
You could try restoring the system software with the original CDs if you're not afraid of losing anything. It's going to take you back to a very early (rudimentary and almost unusable) version of Mac OS X, though. I just looked at my 500 MHz iBook's CD set, and no OS 9.1 CD is included. Mac OS 9.1 was the default operating system on the 500 MHz model, so if you do the software restore, Mac OS 9.1 will be what it starts up in.
With that in mind, you can find the instructions on doing the software restore in this Apple Knowledge Base article:
http://support.apple.com/kb/TA26426
The version of Mac OS X will be 10.0.3 or 10.0.4, and is really quite unusable, so be prepared to use OS 9 until you are able to find a Mac OS X 10.3 CD set or 10.4 DVD (or CD set).
The usual hard drive on the 500 MHz iBook is 10 GB if it hasn't been replaced, so it's possible that a too-full hard drive may be the problem. Also, the nine-year-old drive may be failing. If you can get into Disk Utility, you can click on the top hard drive icon in the left sidebar and check the
S.M.A.R.T. status of the hard drive at the bottom right of the pane. (It should say "Verified.")
A set of 10.3 CDs is likely to cost you more than the iBook is worth at this point. It would be a shame to buy them, only to find that the hard drive is failing.
Good luck.