Why are you back at 8.6 if you have had to reinstall the OS? If, as you say, you have the installation disk for OS 9.0.4 then that is the lowest OS you should be on right now. There is not a single disk, that I know of, that will take you from OS 9.0.4 to OS 9.2.2
Do you get an error message at all if you actually click on the disk icon?
On the first two installer screens, take a look at the "options". Clean install should allow you to install onto any disk, regardless of the current OS.
By the way, what happened that you had to reinstall the OS in the first place?
I have to reinstall my operating systems on my IMac. I currently have 8.6. I have the disk to update to 9.0.4 all the way to 9.2.2 (which is what I had before I had to reinstall everything). My problem is that when I get to the SELECT DESTINATION window my hard drive comes up but the SELECT button is grayed out so I can't select and load it. It says the available disk space is 17399MB and the required disk space for installation is 619MB. I have loaded it before so am I missing something?
Processor: Power PC G3
Speed: 233 MHz
Built in memory: 96 MB
I have virtual memory off