You won't be able to install Tiger without the DVD, just the Panther from the DVD you have. I don't know that it will matter much on a free G4 iBook.
Insert the Panther DVD.
Power up the iBook, and press the "option" key.
You will get a boot menu asking if you want to boot from your hard drive (usually called Macintosh HD) or from the DVD.
Select the DVD.
The DVD will have an option to format your drive erasing everything.
I know that the Disk Utility has tools to overwrite everything multiple times to make sure it's never recoverable, but I don't know all the options available on the Panther install DVD. A regular re-format will erase files well enough unless your friend is very computer savvy and puts time into trying to recover some of the files (it's like shredding a stack of paper, someone with a lot of time could tape it back together).
Format, then re-install OS X from the DVD.