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Same thing for me on my 1,33, whole option isn't available under "trackpad". I have to use iScroll2 anyway, so it allows me to use two fingers for secondary click.
 
I tried iScroll2 also but it does not work in this machine apparently because this has USB based touchpad and not the older one (ADB?)
 
My 12" PB G4 (late 2005) started to show similiar problems, artifacts on screen, inability to properly load up the system. Intend to reflow it, but I cant move past those springy screws (nuts?) holding the radiator. Looks like the previous owner tried to drill them, because their heads seem damaged :/ Any hints for that ?
 
If you keep turning those screws and nothing happens, then their mounts to the logicboard have been broken. If they are broken, you can remove the heatsink without removing those screws.
 
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