Macgeek417,
Try updating the drivers for the hard disk drive. See if OS 9.x will install from there. If it installs, then download Firmware Update version 4.1.9f4 (under OS 9.x's Software Update control panel). Follow the instructions and install the update. It basically allows OSX and OS9 to boot when both OS versions are present on the same system.
If the CD containing OS9 doesn't want to boot, try restarting and hold down the letter C on the keyboard. If that doesn't work, try Option until the CD shows up under the boot choice menu. If that doesn't work, boot into OSX, go into your control panel/system preferences, under Startup Disk, choose the OS9 CD (double-click on the icon) and restart the iMac. It should boot off of the CD.
If any of these won't work, then possibly the CD drive is bad or the CD itself is bad (too many scratches, too dirty, etc.).
73s de Phreakout.