The maximum operating system on the two iMac G3 350 MHz are :
'''Apple iMac G3/350 (Slot Loading - Blueberry) Specs'''
Identifiers: Slot Loading No FW - M7469LL/A - ''++PowerMac2,1++'' - ''++M5521++'' - ''++1821++''
Pre-Installed MacOS:8.6 '''Maximum MacOS:X 10.3.9'''
'''Apple iMac G3/350 (Summer 2000 - Indigo) Specs'''
Identifiers: Summer 2000 - No FW/AP - M7667LL/A - ''++PowerMac2,2++'' - ''++M5521++'' - ''++1857++''
Pre-Installed MacOS:9.0.4 '''Maximum MacOS:X 10.3.9'''
So the disk you are trying to install, won’t work on your machine.
So your drive may be working fine but just need the correct system disk.