As I said, (don't bring poor Paddy into this

)my initial instructions are the opposite of what one would normally do but it was intended to allow special files for the notebook to possibly be installed since that would be the computer 'in charge' of installation at the time.
The fact that you can't see the install disk on the desktop of the iBook when it is in the G4 and the G4 is in FWTDM it probably means the install disk is particular to the G4/eMac line. That means the iBook won't recognize it so you may have to do it the 'normal' way.
My procedure was based on Option 2 in this Apple article where specific files would not be installed in the intended computer if done the usual way. The computer with 'DVD drive' in this example would be the G4 and the one with the "CD drive" would be the iBook.
http://support.apple.com/kb/TA24279?viewlocale=en_USIf the install disk does not show then it isn't recognized by the iBook so you then have to resort to the 'normal' procedure spelled out here:
http://support.apple.com/kb/HT1661Now, if you have a good install already on the G4 and you would like to clone it to the iBook, all you have to do is use SuperDuper or Carbon Copy Cloner to have an exact copy on the iBook. Of course you might miss a few files indigenous to the iBook but as I mentioned earlier, I've done that with my Wallstreet and Panther and it works fine.
One other thing to try is to make a dmg of the install drive using Disk Utility and copy that to the iBook. Then see if you can use that to install to the iBook, though I would doubt it would work if not a retail install.
As to the drive that is in FW disk mode, you will drag it to the trash to eject the drive. Then restart (keyboard if you have that option) or use the button to shut down by holding.