Reinstaling mac o x but there's no destination volume to select from

It is most likely because your internal hard drive has failed. I am guessing you are starting your computer up from a dvd/cd, and it cannot find the start up disk to install the Operating system on. You can further confirm this by starting your computer with no dvd/ cd and you may get a flashing question mark / file folder picasso face.

If your machine is the one pictured ( g3 clamshell ibook ), with what you would have to pay for a new hard drive, installation, and recovery of your old, failed hard drive, it would probably be a better move to invest those few hundred dollars into something more recent, faster and far more efficient. It may not be what you want to hear, but christmas / income tax is right around the corner.

Plus, if you went ahead to restore that computer, many other components in that computer maybe soon to failing, making even less cost effective?