OK...there's something else we can try. Note: Disconnect the power cord from the system before attempting to remove the CMOS battery.
Every desktop has a little battery in it, probably spec'd for CR 2032. These are available anywhere batteries are sold for electronics of any type, cost less than $5.
Replace the battery, insuring that you put it in with the appropriate side up/out...it's hard to get wrong, since there are only 2 sides.
CMOS Battery Replacement - http://www.liverepair.com/encyclopedia/art...cmosreplace.asp
If you don't want to replace the battery...there is no guarantee that replacing it will change anything, it's just something I would do...then you need to remove it for a short period, then put it back in with the correct side and without damaging the clip that retains it in place. Then see if the system will boot the CD.
My reasoning for replacing it...the CMOS/BIOS is not behaving normally (IMO).
I'm assuming that you burned the .iso file into a bootable CD correctly. If not, then it won't ever boot, even if the BIOS/CMOS is functioning properly. If possible, you should test it on another system. This probably ought to be done before anything else.