"The system software on the startup disk only functions on the original media, not if copied to another drive... I previously tried dragging the system folder off the OS 9 CD to the desktop but that didn't work either."
That's the error message you'd receive by dragging the installer disk's System Folder directly to the desktop or hard drive of the Mac. What type of OS 9.2.1 installer disk is this? Is it white with a large "9" on it and if so, is it a full installer or just the OS 9.2.1 Update? If it's a grey Restore disk for another model Mac, that could explain why you're not able to install the software. Additionally, some Macs had a specific pre-OS X software build that includes drivers to support the hardware in that model. In some cases, these drivers may not be found on the universal/retail installer disks, requiring the use of the disk(s) that shipped with the computer when new.