Having continuous issues with my iMac, all I want to do is perform a clean install... at my wit's end. Help please. :(

I apologize in advice if this story is discombobulated or more information is needed to provide me with an answer. I will do my best to provide as much details as possible, but this is a problem that has been occuring for the past few weeks and some things I've forgotten the specifics of.

I will start by explaining that my iMac specs are:

Processor 3.06 GHz Intel Core 2 Duo

Memory 4 GB 1067 MHz DDR3

Version 10.6.8

I've owned this iMac since about April of 2010. I've never had any problems with it until recently. At one point in time, I had a Boot Camp partition made in order to install Windows, as I wanted to run some games that weren't available to Mac users. After awhile, I eventually bought a Windows Laptop for my gaming needs. When this happened, I decided to erase previously stated Boot Camp partition in order to free up more space on my hard drive.

After a few months, had major issues involving a trojan virus on my laptop, it destroyed my hard drive, and I wasn't able to buy a new one at that time. Recently decided to try and create a new Boot Camp partition to reinstall Windows. When I attempted that, (I apologize, I don't remember the specific error) it wouldn't allow me, and from what I remember after doing some google research, it sounded like somehow my hard drive had become disorganized, and needed to somehow be reorganized.

At some point in my google research I found that using the Repair function in Disk Utilities would possibly help. When I tried that, (the only reason I know this is because I tried just now to get the error to pop up) I'm given a message "This disk needs to be repaired. Start up your computer with another disk (such as your Mac OS X installation disc), and then use Disk Utility to repair this disk.

So here I'm thinking, "okay! No big deal! I have the disk still, I will just back up my hard drive to an external hard drive". So I buy an external HDD, back up everything I need. I then put the disk in, and my optical drive spends some time thinking, then spits it back out. It does this repeatedly. I do some more google research, find that optical drives crapping out on mac users isn't all that uncommon. I try to clean it with a trick someone suggested. I then tilted my iMac to one side, it accepts a cd! I try it again, and I'm no longer able to trick my iMac into reading disks. Sad face.

Instead of hefting large sums of cash at Apple to replace my optical drive, I buy a far more affordable external cd/dvd drive that is working perfectly fine. So after waiting for that to be delivered, 3 days later, I'm excited to finally get a clean install with my OS X drive. At this point, I care little about repairing, and have decided to just completely clean install. I restart my iMac, boot from disk, and I get the spinny thing for about 20 minutes. I think, "hmm... should it take this long?" So I reboot and try again. Same thing. I then let it run overnight, and wake up to spinny thing. When my Mac is on, it reads the dvd just fine. It just won't boot from it and let me start the clean install.

So then I get the idea maybe I can do a remote install of the disk from my friend's macbook. No such luck, won't seem to recognize anything. Then I see that I can make a copy of the disk image to my computer, and burn that image to a partition made on my external HDD, so that I can boot from that. Well, the only info I could find was a gentleman burning a downloaded version of OSX Lion, but I figured, "hey, its the same thing, right?" I guess not. I tried copying the image using the restore function in Disk Utilities, and it does indeed show up when I hold Option at start up, but booting from it does not start up properly. It starts up like any normal time I restart. I'm thinking its cause the way I copied it didn't involve a .dmg file.

So I try to copy the image to a file on my computer, but when I do that, I get some sort of input/output error.

What can I do at this point? I thought I originally set up Time Machine but when I checked recently, no such luck. All I want is a fresh reboot of my Mac. I'm guessing somehow my hard drive became corrupted in some way. I mean, it truly doesn't seem to be affecting anything, except somehow even after deleting all known movie, music, game, etc. files, I still am using up 270 gb of space. Maybe I never un-did the Boot Camp partition properly and kinda screwed myself on this one.

I've tried just about everything. I never invested in Apple Care, but even had I done so, I think it would have exceeded the warranty, as I had thought it was 2 years. I could be wrong, either way, its water under the bridge now. I need to fix this myself. I'd still like to use my iMac for general use, and to utilize the 1 TB of storage it possesses.

Any help is greatly appreciated, sorry for the wall of text, its been a complicated few weeks. Thanks!