iMac 2008 where does this wire goes? Solved

Here’s the logic board connections laid-out as you can see the bottom Power button connection is a two pin connector (one of the few) and it is a single wire connection which is what you have. The switch uses the body case (chassis ground) as the other side.

I’m suspecting the system is not turning on as the power button connection is not connected as that’s what I suspect you’ve got here. But it’s not properly routed. You’ll need to pop out the HD to fix this. Press on the Black upper bracket clip down to snap it out and disconnect the three cables, so you can then fix things.