luke jackson, see if this will shed some light on it :"
LED #1
• Indicates that the trickle voltage from the power supply has been detected by the main logic board. This LED will remain ON whenever the iMac is connected to a working AC power source. The LED will remain on even when the computer has been shut down or put to sleep. The LED will turn off only if the AC power source is disconnected or the power supply is faulty.
LED #2
• Indicates that the main logic board has detected proper power from the power supply when the computer is turned on. This LED will be ON when the computer is turned on and the power supply is working correctly.
LED #3
• Indicates that the computer and the LCD display are communicating. This LED will be ON when the computer is turned on and video signal is being generated.
Front LED
• Indicates that the computer has power but no video signal (e.g., the computer is starting up or the display has entered Sleep mode, turning off the video signal). This LED will pulse when the entire system has entered Energy Saver mode.
See if this trouble shooting guide will help you .
Power Issues
No Power.
The iMac will not turn on. The display remains black and there are no sounds from the fans or drives.
1. Verify the power outlet is good. Plug a different device into the socket to ensure there is power, or plug the iMac into another outlet. Does the iMac power on now?
Yes. Resolved. Bad outlet.
No: Go on to the next step.
2. Check the power cord. Use a known good power cord. Does the iMac power on now?
Yes: Your power cord has failed. Replace the AC power cord.
No: Go on to the next step.
3. Check the connection of the power cord on both ends. Verify that the power cord is securely plugged into both the AC outlet and back of the computer. Does the iMac power on now?
Yes: You may have a loose fit to your power cord. Replace the AC power cord and test.
No: Go on to the next step.
4. Remove and reinstall the SO-DIMM memory modules, located in the bottom of the
computer. Does the iMac power on now?
Yes: Issue resolved.
No: Go on to the next step.
5. Plug a bus powered FireWire device in like an iPod using a FireWire cable or other FireWire drive or device with a power LED. Does the iPod show charging or the FireWire device show a power LED on?
Yes: The AC Power Inlet is good. Go on to the next step.
No: AC power is not being detected. If you’ve verified the outlet and power cord, replace the AC Power Inlet.
6. Plug a bus powered USB device into the USB ports on the rear of the computer like a keyboard, iPod Shuffle or USB 2.0 iPod using a USB cable and press the power button. Does the iPod show power or the keyboard caps lock LED light?
Yes: The Power Supply is functioning. Go on to the next step.
Yes, but only for a moment: The Power Supply cannot maintain power; replace the Power Supply.
No: The Power Supply has failed. Replace the Power Supply.
7. At this point in the Power On process, you should hear a boot chime and see the front LED on the computer light up. When the main logic board and LCD panel communicate to deliver video, the front LED should go out. Does the Front LED go off?
Yes: The LCD and main logic board have communicated. If there is no picture on the display, follow No Video troubleshooting.
No: Your logic board is not communicating with LCD panel. Open the unit and re-seat the TMDS cable and test again. If the issue persists, replace the main logic board."
Right now from the symptoms you described, it looks like a bad power supply. Hope this helps, good luck.