Well that is something to work with. So it boots to the DVD and when you proceed to install, it baulks.
On the DVD, after selecting your language, up the top at the menu item Utilities, move down to select Disk Utility again, and opening that, can you see the MacBook's HD on the left. If you click on the disk,
does it say GUID partition Table
Is the volume Macintosh HD visible? If so and you click on it does it say the format is Mac OS Extended (Journaled)
If neither of these are showing then you to reformat it again via the Erase tab, and double check that Mac OS Extended (Journaled) is the intended format.
And if all that is in place, and you exit Disk Utility, I am perplexed that the installation should not proceed.
Do you have a backup at all, such as a clone on an external drive?