How to reformat '06 Macbook Pro - cannot reach desktop

I have a 2006 Macbook Pro. I try and boot it but I cannot reach the desktop. My plan is to try and reformat it with 10.6.7 Snow Lep or 10.7 Lion (does Lion work with '06 Macbook Pro's, how about Mountain Lion?)

But here is the issue. I cannot access the desktop and the DVD Drive is non-functioning. The obvious solution is to do a bootable USB drive (I have another newer Macbook Pro to do the setup) BUT... since I cannot access the desktop, how do I actually do the reformatting with the bootable USB?