Dave,
I cannot speak to the iMovie, since my use of it is limited. I only use it when importing directly from my digital video camera, and it works great for that. I simply plug it in, fast forward to the clip I need and click import. I've never actually worked with a file already created.
I would think it would read any QuickTime formatted file, but that's really just a guess.
As far as the DVD, perhaps I could help you out. I have several macs all happily playing DVDs.
Let's start with the obvious and work our way to the more complex.
What kind of mac are you trying to play DVDs on? You mentioned it was a G4 upgrade, is this a laptop or a desktop?
Is this a 3rd party DVD drive?
Is there any circumstance in which you have been successful in watching a DVD?
Are you attempting to hook your machine up to a projector, tv or VCR to play your DVD on OR are you just attempting to watch it on the computer monitor?
What DVDs have you tried to play?
What version of OSX/DVD player do you have on your current system?
Could you describe what happens when you attempt to watch a DVD? (does your screen go black with no picture, but you get audio, or vis-versa?)
How exactly are you attempting to play the DVD?
You may have already answered these questions, but if not, take some time and jot your answers down, they are important questions.