I recently had the hard drive fail in my late 2006 iMac that I use as a server. Since I had to replace the drive, I thought I would share how to swap it. I decided to use an SSD or Solid State drive as a replacement, which greatly improves performance.
Please be aware that if you decide to try this yourself you could void your warranty if you have one, and could potentially damage the iMac. I, Aaron Zollo and/or Zollotech will not be help responsible for any damage to the iMac, yourself or problems you may run into while attempting this repair.