iMac 2007 24" 7.1 - Will not boot into MAC OS

Good morning fellow Experts, I am having issues with my iMac, I have done quite a lot of fault finding which I will document below and need your help to resolve this issue.

Fault:
On power up I hear the startup sound and Apple Logo appears on screen timer spins and then screen starts to flicker (mainly at the top) and then white screen for a while and then Apple Logo reappears and then it stays like that.

Background on checks performed:
Pressing Command+R does not go into internet/recovery
Pressing ALT does show Boot Manager
PRAM + SMC Resets both performed
Memory Modules swapped out to no effect
Different HDD's used over many restarts
When existing HDD removed and checked for Faults there was Lion OSX installed and Windows Boot Camp Partition

Failed attempts at resolving issue:
El Capitan USB Boot Disk used - Selected from Boot Menu but nothing loads
Lion USB Boot Disk used - Selected from Boot Menu but nothing loads
HDD put into MBP and Internet recovered to Mountain Lion and then placed into iMac but still no boot.

I am aware that there is a Firmware update available but not sure what version it's at.

I'm getting to the point where I think that this is more trouble than what it's worth :(

Your suggestions will be greatly received.

Thanks
Andrew