Can't boot iMac 06/07 Leopard - No Single user mode, No boot disk selection

My iMac 06/07 simply won't boot. This is the scenario:

- it wouldn't boot, being stuck on a the blue screen.

- I have then booted in single user mode, and did a fsck -fy which went okay. It said the "system was modified" and that the File System was Okay.

- It still didn't boot - so I have tried command + option + r + p and, in single user mode I have deleted the cache folder but accidently I HAVE DELETED THE WHOLE LYBRARY FOLDER.

- I believe I a problem with CD drive so I have created a bootable USB from the original install CD.

- But now I can't boot in single user mode nor I can select which drive to boot from.

- When it boots it stays on a white screen, after a few minutes a folder with a question mark appears on the screen and that's it.

Any suggestions would be greatly appreciated!!

Many many thanks!