Make sure you are using OS X 10.6 Snow Leopard as that is the highest that will run on your system.
First see if you can run the system without the battery installed (just the AC power adapter plugged in). Sometimes the battery blisters causing problems.
As you have a second Mac you could try using it to setup your MacBook by putting your MacBook into Target disk mode and then using a FireWire cable interconnect it to your iMac. At that point the MAcBook's HD will act as if it were an external HD. Using the OS installer HD based installer app or CD/DVD you should be able to re-install the OS that way as well. I would first do a diagnostics of the HD first using '''Disk Utility''', just be careful to do the correct drive!