The Transformation
Otto Octavius was reckless during an expirement and caused a small nuclear reaction that fused his mechanical arms to his body. He was taken to Bliss Private Hospital where Dr. Kevin Hunt diagnosed a certain amount of brain damage. Octavius's nueral pathways had compensated for the new arms. When he regained conciousness in the hospital, he took the hospital workers hostage to serve as his lab assistants. After soundly defeating Spider-Man when he came to stop him, he went to the Atomic Research Center and took control of the facility.
After and inadvertant pep talk from Johnny Storm, Spider-Man broke into the Center and defeated Doctor Octopus by getting past his arms to punch him.
Matt Murdock was Doctor Octopus's first lawyer, and by using the defense of brain damage got Octavius a reduced sentence. While in prison Octavius honed the use of his mechanical arms to pinpoint accuracy. Once he was released he helped bust out a criminal named Blackie Gaxton for a hundred thousand dollars offered by Gaxton's lawyer, Bennett Brant (Betty Brant's brother). Blackie accidently killed Bennett in a fight with Spider-Man.
Once caught again he was sentenced to twenty years and to have his arms removed. Hank Pym, Reed Richards, and Tony Stark all participated in the removal process. Octavius, however, had learned to control his arms seperately from his body, making this decision obsolete.