iMac won't start and got really hot until unplugged.

It is a White (I believe A1058) iMac that was working just fine. It was sleeping then the fans went nutz and ran on high. The screen was black and when I hit the space bar, nothing happened. I pressed and held the power button and it shut down. After that when pressing the power button only the light on the front would light at full brightness and nothing else. I have tried all the posted fixes and the last produced the most dire effects. Leaving the power connected overnight, as described in one fix-it post, although the unit still would not react, it was severely hot. I unplugged it immediately and took the back off and the processor cover and the hard drive were so hot you could not touch them. I ran the tests to read the 4 LEDs, LED 1 lights and after resetting the SMU LED 2 flashes while pressing the internal power button. This supposedly means that the power supply is bad? Then if the PS is bad, how did the machine get enough power to heat up as it did.

I have pulled the hard drive to get important files off it and that worked just fine. I'd hate to toss or put this on a shelf and leave it unused. I'd like to fix it, I am capable of DIY Apple computer repair. Any assistance will be greatly appreciated.