Macbook - trying to erase HD

Hello

I've been trying to erase the HD on my macbook as I am trying to trade it in.

I wanted to erase the hard drive and set it back to the original factory settings. I have the original install DVD. I've tried all the steps to doing this and it doesn't seem to work. I insert the DVD, and click the install Mac OS X icon, then I click the "restart" button. The computer will boot up but it stops right at the screen in that is the blue galaxy or whateve, sorry for the poor explanation on that part.

The mac is

10.5.8

2.4 ghz intel core 2 duo

I've been going crazy trying to figure out how to erase the drive. I've tried from disk utility to holding down the C button when starting up the computer. Anyone know of a way that I can completely reset the computer to factory settings so that all things are erased?

Thanks