OS 9
if its running X, it has the 9 environment
capability, but you still have to install either OS 9 or 9.1-2. you may install these at your discretion, or upgrade them till you're at 9.2, it will give you the capability to boot into these back and forth, only then will it show in the startup\disc preferences in OS X. this might solve some directory issues. Once 9 is installed try Jaguar. there is another test which is the fsc -k test:
http://docs.info.apple.com/article.html?artnum=106214
try this before installing 9. once you install 9 you may go through the apple menu and under Control Panel>start up disc. OS X will be there to start-up.
but you can boot from the CD from 9 and do the upgrade selection or clean install.
I would advise to be patient and try to borrow a firewire cd-drive from someone or try the following: install OS X on an external firewire Hardrive, you may reboot from this same drive (via system preferences>startup disc) and it will become the active primary drive on the PBook, once that happens you may install OS X on the internal HD, this process becomes better since the internal HD becomes un-mounted and installation requires less effort, once installed shutdown completely and disconnect the external HD and restart, the new installation will be ready.