Is it Possible to restore a PPC G5 to factory settings if the dvd drive doesn't work?

Yes, you can use http://docs.info.apple.com/article.html?artnum=58583>Target Disk Mode

Try loading the install disc for the iMac on your other Mac, and reset the SMU on the iMac:

1. Shut down the computer.

2. Unplug the computer's power cord.

3. Press and hold the power button for 5 seconds.

4. Release the power button.

5. Attach the computers power cable.

6. Press the power button to turn on the computer.

Then try Target Disk Mode again

Why do you want to restore to "factory settings?" (I think you mean reinstall, right?) You should describe what's brought you to this point.

Can you say exactly what it was you did from the Install disc when you were booted in Target Disk Mode?

If you have another Mac with a working optical drive as well as a Firewire hard drive with a bit of free space on it, with Disk Utility, resize the existing partition on the FW drive and create a new partition big enough to hold the installer CD/DVD that the G5 came with. Then use the restore tab to copy the disc to the new partition. Then use the FW drive with the G5 to boot, via the option key, and erase and install the OS on the G5, thus reseting it to factory original. After the install, shut it off rather than letting it boot off the hard drive, so the next owner gets the welcome and personalize screens.

If you are getting ready to sell the computer (you can do this in Target Disk Mode from the other Mac:)

http://hivelogic.com/articles/how-to-prepare-a-mac-for-sale/

He recommends a 7 pass erase. This is complete time wasting overkill. Just do a one pass zero. That will be completely sufficient. No one will ever get one byte of your data.

But if this isn't your intention, please post back with what you are trying to do.

Even if you could erase the drive in target disk mode, you won't be able to reinstall the Mac OS from such a different Mac. The installer won't allow it. Stop waisting your time with target disk mode attempts.

Actually, it isn't very hard to open up the back of the iMac G5, particularly the first 2 generations before the iSight model, and replace the optical drive.

If I were to try this would re-installation be possible without access to the disc utilities?

You will be using the Disc Utility from the Install DVD (Tiger?) inserted in the MBP. So no, this should not be a problem.

First, it may not always work, but it is possible to install in TDM from an Intel to PPC Mac, the MBP to the G5. You are only borrowing the DVD drive of the MacBook Pro, essentially using the MBP as an external optical drive.

I am quoting, paraphrasing and substituting terms, as appropriate, from an excellent post by jsd2, which you can read in full here along with other comments, including his successful experience doing this.

https://discussions.apple.com/thread/2699223?threadID=2699223&start=15&tstart=0

Shut down the G5. Then put the install disc meant for the G5 (I'm assuming it's Tiger 10.4 something). Restart the MBP while holding down the T key until you see the Firewire Symbol. The MBP, not the G5, is running in TDM. Connect it to the G5 with the FW cable. THEN, start up the G5 holding down the Option key. This will bring you to a screen with startup choices. Here, hopefully, you will see the Tiger Install DVD as a choice. Select it and boot from it. If successful, proceed with the installation as usual. Be sure you pick the correct "Macintosh HD," or whatever you may have named it, for the install.

You should also be able to first zero out the drive on the G5 to securely erase all data -- if that is what you want to do -- then reformat the drive using the Disc Utility on the 10.4 Install disc, which is still running from the optical drive of the MBP.

Here is an excellent article on the steps for formatting.

http://web.me.com/pondini/AppleTips/DU1.html

You will select Apple Partition Map as the partition scheme for the G5 (one partition.) The format is OS Extended Journaled.

-----------------------------------------

From jsd2 in that thread on getting around the hardware incompatibility:

But if you set up FireWire Target Disk mode "the other way," as I had suggested above, and as you also described in the earlier section of your tip, using the Mac with the good DVD drive as the target, and the Mac with the bad DVD drive as the host, then this potential hardware incompatibility issue does not arise. The host computer running the install DVD is the same computer that receives the new OS X installation. The computer with the good drive is not running anything at all - it is completely passive except for "lending out" its optical drive via TDM. You should therefore be able to use dissimilar Macs when connected in this manner, provided that the host Mac is otherwise suitable for the particular install DVD that is being used.

That's pretty cool. I never tried this approach of target disk mode to share the DVD drive. Seems to require a retail DVD. I don't know if the original poster has this to try this technique. If it works he won't need an external hard drive.

Once you boot off the remote DVD, you can go to the Utilities menu, select Disk Utility and use the copy there to erase the G5 hard drive and quit back to the installer and install a new working system. If you really want to keep the majority of the software and files on the G5, skip the erase and go right to a archive and install to repair the damaged system on the G5. That's all that seems to be wrong, besides the bad optical drive. Good luck.