You have to use disks to install the OS. You can get the original disks from Apple but that will only give you 10.4 and an older iLife. I'd go with a 10.6 Snow Leopard installation and iLife '11.
The 10.6 Snow Leopard DVD is in the Apple online store. You can get it for $19.99. http://store.apple.com/us/product/MC573/mac-os-x-106-snow-leopard
You can get the iLife ’11 DVD which will run on 10.6 on eBay or Amazon.com fairly cheap. http://www.ebay.com/sch/i.html?_odkw=apple+ilife+11&LH_Auction=1&LH_BIN=1&_sop=1 2&_osacat=0&_from=R40&_trkparms=72%253A1234%257C66%253A2%257C65%253A12%257C39%25 3A1&LH_PrefLoc=1&_sc=1&_trksid=p2045573.m570.l2632.R2&_nkw=apple+ilife+11&_sacat =18793
http://www.amazon.com/Apple-MC623Z-A-iLife-VERSION/dp/B003XKRZES/ref=sr_1_1?s=so ftware&ie=UTF8&qid=1376932206&sr=1-1&keywords=ilife+%2711
Put your install DVD into the optical drive (CD/DVD drive) and reboot. Be sure to either use the disc that came with your Mac, or, if you installed a later Mac OS X version from disc, use the newer disc. As soon as you hear the boot chime, hold down the "c" key on your keyboard (or the Option Key until the Install Disk shows up) until the apple shows up. That will force your MacBook to boot from the install DVD in the optical drive.
When it does start up, you'll see a panel asking you to choose your language. Choose your language and press the Return key on your keyboard once. It will then present you with an Installation window.
Completely ignore this window and click on Utilities in the top menu and scroll down to Disk Utility and click it. You should see your hard drive in the left hand column along with your other drives. Click on the drive and select the Erase tab. Set the format value to Mac OS Extended (Journaled) and click the Erase button. After that has finished select the Partition tab. Type in a Name for your hard drive and select how many partitions you want from the Volume Scheme. The usual setting is one partition. Click on the Options button after you've selected a partition to make sure it's set for GUID. Then click the Apply button and after the Partitioning is done quit Disk Utility.
You can now follow the instructions on the install screen