Little folder in middle of screen when starting the iMac G5 20up?

What you are seeing is the system looking for its system files which would be on the internal HDD.

Reference: If your Mac doesn't start up all the way

This is a PowerPC CPU based system not like the newer Intel CPU and now Apples own M1 SoC. Here’s a bit more detail on your system 20” iMac G5 2.1 GHz Specs

You’ll have a hard time finding parts for the model and I would strongly recommend you don’t connect it to the internet as the web browser it has won’t work with the newer HTML dialog and the OS-9 or OS-X 10.5.8 (the last version for PowerPC systems) applications are very limited.

You’ll need to find an older SATA I (1.5 Gb/s) drive to replace yours if its bad. Todays SATA III (6.0 Gb/s) drives won’t work unless it is offers auto sense technology which is becoming harder to find (review the drives spec sheet it most list the correct speed).

For sure this is a classic system! Its something one would have on a shelf as its so iconic! FYI: One is on display as the Smithsonian! It’s not one for use today like a Ford Model T wouldn’t be either.