MacOS – Have: Single partition firewire HD w/ 10.5.8 (the StartUp Disk), 2 bootable USB drives (1st= 10.6.7, 2nd= 10.8.2). Want: upgrade firewire HD to 10.8.2

(Just to provide an actual answer that you can accept).

It looks like so far you've not actually tried accessing the Boot selection menu. Rather, you've mistakenly entered target disk mode.

Press and hold the alt key immediately after powering on the system (before you hear the chime). You should get a selection of the available boot volumes (if any). If you have an external drive or install DVD, this should appear. Use the arrow keys to navigate to your choice and hit enter to boot from that volume.

Use your alternative boot to backup data and repair/reinstall your main boot disk.

You may want to try the method described here under 'Reset Mac Password – without a CD'. This method resets the OS so that it thinks that it's the first time it's been run. This will kick off the Create New User Account wizard when the OS is rebooted, which allows you to create a new account with Administrator rights. You can then use this account to reset the password of the original account.

Extract from above article:

Stage 1) Boot into Single User Mode and remove a setup file

• Restart the Mac holding down the Command+S keys, this will take you into Single User Mode and it’s Terminal interface

• You’ll need to check the filesystem first: fsck -fy

• Next, you must mount the root drive as writeable so that changes will save: mount -uw /

• Now, type the following command exactly, followed by the enter key: rm /var/db/.applesetupdone

• After removing the applesetupdone file, you need to reboot, type ‘reboot’ and hit enter.

Stage 2) Create a New User Account upon System Boot

You aren’t finished, but the hard part is now over – no more command lines, you’ll now be in the familiar Mac OS X GUI to finish the password reset process. In this step we just create a new user account as if you just got a new Mac:

• Upon reboot, you will be presented with the traditional “Welcome Wizard” startup screen just like when you first get a Mac
• Follow the welcome wizard and create a new user account – making the account name different from the account whose password you want to recover
• Continue on and boot into Mac OS X with this newly created user account, this new user account is an Administrator and has administrative access

Stage 3) Reset the Forgot Password via System Preferences

You are almost done, now you just need to reset the forgotten user account password using the Accounts control panel:

• Once you are booted into Mac OS X, click on the Apple logo and then navigate down to “System Preferences”
• Click on the “Accounts” icon in System Preferences
• Click on the Lock icon in the lower left corner of the “Accounts” preference window and enter the newly created user credentials, this enables you to change other user accounts and reset other users passwords
• On the left side user panel, select the user account containing the forgotten password
• With the user of the forgotten password account selected, click on the “Reset Password” button
• Enter a new password for that user, be sure to include a meaningful hint so you don’t forget it again!
• Close System Preferences and reboot the Mac
• You can now login to the previously inaccessible user account using the newly reset password! All user files and settings are maintained as before the password was forgotten