This problem indicates that the iBook cannot find a valid system folder. There are a number of reasons for this. The directories on the HD may be corrupt, the OS could have become corrupt from incorrect shutdowns, (Forced reboot during a freeze), someone crept into your machine at night and stole your system folder, you trashed something from the System Folder or the HD itself is not working.
Some of your posts indicate that you are running some flavor of OS X but this indication is from OS 9 and below. So, what is the iBook you are running, what OS were you running before this happened and exactly what are the disks that you have found?
Do you have any Mac utilities? Disk Warrior or Tech Tool Pro?
Get back to us with this information and we can establish a starting point
P
I tried starting my ibook this morning and I get a blank screen with a folder in the middle flashing a question mark and a happy face...what up? Hurry please MrMacfixit....PS: IO found the CD's you were talking about earlier.

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