how do I restore my mac to original factory settings

What version of OS X are you running?

OS X; 10.6: http://support.apple.com/kb/HT3910?viewlocale=en_US

OS X; 10.7 & 10.8: http://support.apple.com/kb/ph11273

If you are doing this because you want to sell it, please be advised that if you updated it to Lion or Mountain Lion (10.7 or 10.8), the license is not transferable and you are required to wipe the drive and reinstall the original OS. If you sell it with one of those OS's, the buyer will never be able to reinstall because the license is tied to your Apple ID forever.