I just finished fixing a similar problem with an iBook G3 my son gave me today. He got it a while few years ago from a friend and had it set to auto log on.... And of course he could not remember any password:) No original disks available and the ones that came with my mini mac would not boot up the iBook.
I followed the intructions I found on
http://www.macosxtips.co.uk/index_files/reset-lost-os-x-account-password.php
"First, note the short name of the account. This is the same as the name of its home folder, but not necessarily the name that appears in the login window. Restart your computer, and while it is starting up, hold Command-S. This will start up your Mac in Single User Mode. Once it has started up, you will need to enter three lines of code. Enter
sh /etc/rc
and press return. Then enter
passwd yourusername
and hit return. Now you will have to enter a new password twice. What you type won't appear on screen, but it is working. Once you have done this, type
reboot
and hit return."
I found the short name when I went to system preferences and then accounts.
Make sure to type the spaces also and wait untill the computer finishes the "sh /etc/rc" command before proceeding to the next entry. Could take a few minutes as these older machines are slow.
For me the confusing part is that you need to substitute the actual shortname of the acount where the instructions state "yourusername" For some reason I was thinking to literally when I read the instructions.
After that you can boot up use the new password and change everthing.
I created a new administrator account rebooted and deleted the old account. Now I can use that old 2004 office for mac program that now longer is supported on my min mac after I upgraded to lion. Just finished loading it and am waiting on safari updates to finish.
Hope this helps you get your computer working. Good luck