target disk issues with macbook and iMac

So, I have a new iMac running lion.
An old macbook running leopard.

My macbook won't reboot past the blue screen, a problem many have.
I've tried reinstalling the operating system from the disk, but the stupid laptop won't read the disk.

I got drastic and tried rebooting it in safe mode, single user mode and then rebooting to rejig the PRAM but no luck.

* The only screen I can get it to boot in is target disk.

So, connected my firewire cables, rebooted the macbook in target disk, all went well.
It is seen as an icon on the desktop, is found in disk utility, is found in migration assistant. And then nothing.

There are no files in the macbook according to my iMac.

I first tried migration assistant, but it can't get past the "preparing to transfer files" stage. Left it overnight and still no progress.

Tried Disk Utility - it will verify and repair saying there is no issue with the Macbook but when I try to restore from macbook to iMac it fails.

If I try to open the icon of the macbook, it originally viewed empty folders for applications, library etc, but now if I try to open it, the Finder crashes on the iMac.

Any ideas on how I can get my files off my macbook to my iMac?

At this point the only option I can in visage is to bust open my macbook and hook up the hard drive externally with a case.
I have a time machine back up but I'm sure it's not up to date enough for the files I want off the macbook.

And no I no longer have applecare, the laptop is 5 years old.

Any help would be much appreciated.
To either restore the macbook so I can transfer normally or just transfer the files onto my iMac. I don't want the macbook anymore.

Thanks michelle.

 

progress

so, after about 5 goes trying to reinstall my operating disk, it took it. But finished with a not that said "instillation could not be completed" and a log screen.
I opened the disk utility again, repaired and verified again, and again the system said nothing wrong.

Then opened the startup disk to see what that said, only gave me options to boot from another mac, time machine, hard drive etc which is not what I wanted to do.

I exited, restarted and the welcome window opened, I had to re-enter all my details and now in the accounts, there is only the new one I have had to create. (I though a reinstall was not meant to wipe my setting etc...? I'm assuming it was because I re-entered my details etc and created a new account butI didn't think it would wipe the old one out.)

So at least it opens, but I can't access all my old information. I doubt I've wiped it, just created a new account. It's odd the old one isn't there though.

Know any good programs I can use?
If I connect through target disk mode then there are still no files in the folders. So I don't think migration would work either. And it would probably just migrate the new account which has nothing in it.

I'm annoyed now. It gave me no options to reboot from my old account or access it in anyway. That I could see anyway.