Remove Partition?

No, as the data is still recoverable.

If you want to make sure everything is deleted, go to Disk Utility during the Installation process and chose Erase > Security Options > ZERO OUT and hit the Erase button.
Don't forget to select GUID under the Options button.

After everything is finished you can install the system again and sell your Mac.

 

You'll want to start the iMac up with it's reinstallation discs by putting the DvD in to the iMac restarting and holding down the alt/option key and selecting the DvD. After you have selected your language click on the Utilities menu at the top and select Disk Utility. Click on your disk in the left hand pane (the one that says the size not the "Mac HD" one), then click the Erase tab then choose Mac OS Extended (Journaled) then click Security Options. Zero Drive or 7-Pass should be good enough for what you need. Don't forget it will take a few hours to erase the whole disk, you may want to let it run over night.