So what happened was screen artifacts appeared on the screen (See screenshot) and the computer froze with music looping, similar to a kernel panic.
Now when I start the iMac and the apple logo and spinning progress bar appear, but it quickly freezes soon afterwards. When I attempted to boot off the OSX install disc, the imac has a kernel panic soon after the apple logo appears.
The imac: 24", 2.8Ghz, 4GB, 8800 GS.
I am presuming this has something to do with the GPU, but has anyone seen this sort of screen artifact before or has any idea what could be causing it.