the pasword is still present on the logic board but will only effect the re installing of mac nothing else
This maybe the firmware password. I haven't played around with a firmware password.
Shouldn't you be getting a promote with a key to enter your firmware password? A firmware password will prevent you from doing a lot of things to do with booting.
PPC Mac Firmware password
This seems to me more like the firmware password. You can tell by looking in this Apple article to see if you get the firmware Icon.
Picture of open firmware icon:
http://km.support.apple.com/library/APPLE/APPLECARE_ALLGEOS/HT1352/106482_2.jpg
Setting up firmware password protection in Mac OS X
Overview:
http://support.apple.com/kb/DL675
Detailed explanation:
http://support.apple.com/kb/HT1352
iBook - Open Firmware Password Reset
http://notepad.bobkmertz.com/2006/11/ibook-open-firmware-password-reset.html