Chosen Solution
There are black spots spread all over the screen and especially along the corners and edges as seen in the picture below.
A few days back I had opened up my iMac to replace the HDD with an SSD and while reassembling the iMac, I booted up the system only with the LCD in place without putting on the glass panel to make sure that the issue was not being caused by any dust stuck between the glass panel and the LCD but the spots were still there on the LCD display. So, the issue exists within the LCD panel itself. Also, I noticed some part of the black tape stuck on the backside of the LCD had yielded from the top (circled in red in the picture below).
As the insides of the iMac were extremely dirty with literally layers of black dirt as visible in the picture above, could this have caused dust to get inside the LCD panel causing the dark spots or is something else causing this problem? Any help is greatly appreciated, thanks.
Wow a very dirty boy! Thats thick dust buildup everywhere the power supply, logic board and drives are just covered! The tape at some point let loose so dust got inside the assembly, so yes what you see is dirt between the LCD panel and the backlight box on the backside. Before you can do anything you need to give the system a good dusting. Get a can or two of can’ed air, a couple of soft paint brushes and a tooth brush. Take the system outside and wear a good dust mask and goggles to fully disassemble the system cleaning every nook and crevice. As far as the display its just easier to replace it! 20” iMac LCD assembly, Apple P/N 661-4671 Follow these guides as needed: iMac Intel 20" EMC 2133 and 2210 Display Panel ReplacementiMac Intel 20" EMC 2133 and 2210 Logic Board ReplacementiMac Intel 20" EMC 2133 and 2210 CPU Fan ReplacementiMac Intel 20" EMC 2133 and 2210 Hard Drive Fan ReplacementiMac Intel 20" EMC 2133 and 2210 Optical Drive ReplacementiMac Intel 20" EMC 2133 and 2210 Power Supply Replacement Its a bit of work to bring this dirty boy back, but its worth it!