Help formatting an Imac please

I was just handed down an Imac:

2.0GHz Intel Core 2 Duo
1GB memory
250GB hard drive1
8x double-layer SuperDrive
ATI Radeon HD 2400 XT with 128MB memory

The person that previously owned this machine passed away so I don't have the password.

I have the startup disc but when I insert it, the machine ask's for a password.

What can I do to by-pass the password issue?

Thanks much!

Thanks Rupert!

I was able to re-format but now my wireless internet is way slower than it was just before I reinstalled the OS.

FYI - I am totally new to using Macs.

Before I reinstalled, the machine was running firefox for internet connection. Now I'm running Safari. Could that be the problem?

My wireless signal indicates all bars and I've checked "Use Interference Robustness".

Is there a way to run diagnostics?

Any help is much appreciated.

Nick