Sounds like the system is screwed up.
Few things to try:
Insert the system CD and restart holding Option key instead of C key. See what choices you have for startup..hard drive and CD. Click on the CD and see if it starts that way.
If so run Disk Utility to repair Permissions and the disk. If you still can't start to the hard drive you may have to do an Archive and Install.
http://docs.info.apple.com/article.html?artnum=107120
Have you tried holding down the Shift Key during start up (safe boot mode)?
OR
On start, hold down the Command and S keys to get a black screen with white letters and a command line prompt --
Once you are there, type in:
fsck -yf
(note the space between the fsck and the "dash"yf).....once you hit return, it should do some disk-level checks and tell you it either found errors (in which case you want to run the same command again) or that the disk was "OK".
Once it tells you the disk is "OK", then type:
reboot
and when you push the return key, it should try to start normally.
Other things to try:
Reset power manager
http://docs.info.apple.com/article.html?artnum=14449
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Do you have an external firewire drive or other Mac? You could try starting up in FW Target Disk Mode to run utilities on the drive.
http://docs.info.apple.com/article.html?artnum=58583
