I spoke to someone at Apple, we went through resetting PRAM (didn't help) and then entered in safe mode and ran the disk utility. Disk Utility said that the hard drive could not be repared. Apple then suggested I wipe the drive. I asked if Target Mode was an option and I was passed on to a supervisor.
I now have my iMac connected via firewire to another mac machine using Target Mode. This means I can now access all of my files on the computers internal hard drive (thankfully pretty much everything was saved elsewhere). The apple support guy wanted me to wipe the drive once everything was transferred but I'm not sure this is the best idea.
I explained that the computer worked just fine prior to the lastest software update and that the restart to install the update was where my problems began. I suggested that the update was incomplete or corrupt. I asked if we could somehow install a "correct" version of the current update but he was quite insistant on wiping the drive.
I am transferring the few bits of data off the computer as we speak. I know you can download the Lion update here: http://support.apple.com/kb/DL1484. Is there any way I can transfer this to my iMac so it can properly install it?
EDIT: This website (http://osxdaily.com/2012/02/01/fix-mac-os-x-10-7-3-update-problems-cui-errors-st uck-installs-and-crashes/) mentions that it is possible but doesn't go in to specifics about how to install the update in Target Mode. It simply says "then point the 10.7.3 Combo Update at the troubled Mac and install it that way"
Any help is welcome.
There is yet another option. When booting, hold down
Command + R keys to boot into the Recovery HD.
From here you can re-install OSX. You will need a fast
internet connection as it will download the latest and
complete OSX and install it. Doing this will just overwrite
any old OSX stuff and applications should be intact.
This would be a last resort option should the combo update
not work in an attempt to save the current system.
Thanks for the reply. I tried to install the combo update using the guide posted here but sadly it would not let me select the original HDD to install the update as it states in Disk Utility that "disk utility cant repair this disk. Backup as many of your files as possible, reformat the disk and restore your backed-up files".
I will try to re-install OSX and hopefully it will just overwrite the old OSX stuff and leave applications in tact. Failing that I will have to wipe the drive and start over.
All because I updated to 10.7.3....
OK I fixed it and got everything back to normal. Here's what I did.
The Macintosh HDD was damaged by updating to 10.7.3. I had the message that the HDD was broken and that I needed to "Backup as many of your files as possible, reformat the disk and restore your backed-up files". When I would run Disk Utility (by using Recovery Mode) and try to Verify Disk or Repair Disk it would say the drive was faulty and could not be repaired. Not so.
I plugged in my iMac to another mac with a firewire connection (if you only have one mac, ask around) and started up the 'faulty' iMac in Target Disk Mode (guide here: http://osxdaily.com/2010/04/07/how-to-boot-a-mac-in-target-disk-mode/) and copied all of my files that were on the damaged drive to another computer so I knew they were safe (lesson learned - use time machine or back up your data regularly). Once everything was transferred that I wanted to keep safe I disconnected and exited Target Disk Mode and restarted the faulty iMac.
I had a USB external hard drive to hand which you will need. I had to install a full working version of Lion on this external hard drive (make sure it's empty before you start). I needed to partition the drive before I started. I followed this guide (http://www.makeuseof.com/tag/install-osx-lion-external-drive-test-mac/) about how to make a partition and how to install lion on an external hard drive. Installing Lion on to this external drive took about an hour.
Once Lion was installed (and i went through the process of creating a user and all that stuff) I had access to a working copy of Lion on the faulty iMac. I then bought and installed Disk Warrior 4.4. This is the software which saved my ***. Once Disk Warrior was installed on this new version of Lion I was able to scan the other 'faulty' Macintosh HDD and repair the issues.
Once Disk Warrior had done it's thing (took about 5 minutes) I had to approve it to change some parts of the Macintosh HDD. I had nothing to lose so I gave this a go. It quickly 'repaired' the faulty drive. I opened Disk Utility and performed a 'Verify Disk' and 'Repair Disk' command on the faulty Macintosh HDD. Previously it had said there were errors, now there were none.
I ejected the external hard drive which had Lion installed on it. I restarted the iMac and after a minute of just a grey screen it finally loaded up my previous user account, all settings in place as if nothing was wrong.
Fixed. I am by no means tech-savvy with things like this. It took me a while to gather all of this information together. Apple Support said I had a faulty drive which couldnt be repaired and I would have to completely wipe or send back to them for repair. This wasn't the case.
I hope someone finds this useful.
If Disk Utility can not repair your hard drive the chances are slim to none that it would be possible to install either the combo update or do a full Lion restore nor would the results of doing so likely be pleasant.
There is also a possibility that your drive is failing. One of my Mac Mini's drives went south after only three months. Mac drives seldom die young but it does happen.
Concentrate on getting your data completely backed up with two backups or more being wise. DiskWarrior can often repair drives that Disk Utility can't but it is very expensive and there are no guarantees it will work before purchasing it.
In the future, make sure that you have at least two backups before updating. Running Time Machine in combination with making a clone on a separate drive is painless and pretty much assures that you will never lose more than an hour's worth of work.
I found the following solution on an iMac of friends who just startet up to a first grey then blue screen with gear wheel and rebooted all the time.
Restart iMac in "save Mode" (Hold shift Key at startup)
log in and run software update from Apple Menu
On this iMac the latest security and system update was available for installation
Re-run this update
Restart the iMac
At this time the reboot run normal again.
Side info: Before that I booted up from OSX Snow Leopard Disk and run Disk Utility with the result that the disk seemed to be o.k.!!
Good luck !!!
Unfortunately following a series of (almost) daily kernel panics after starting up my machine this morning it has returned to the gray screen with the spinning icon and the status bar. One difference from before is that this time the computer simply shuts down when the status bar gets almost half way across (further across than the first time).
I am going to follow the same process as before to make sure all my data, which is now backed up, is safe. Following that I will be returning the machine to Apple.
EDIT: It's worth noting that safe mode fails to work upon startup, but recovery mode (CMD+R) does.
I found a simplified way to 'solve' the issue of the grey screen / status bar / shutdown problem which doesn't involve installing Lion.
You will need a copy of the software Disk Warrior, this software is truly a life-saver. Disk Utility just isn't as powerful and is not able to repair the issue.
You need to connect your faulty Mac to a working mac via firewire and launch Target Disk Mode (Guide here about how to launch Target Disk Mode: http://osxdaily.com/2010/04/07/how-to-boot-a-mac-in-target-disk-mode/). Once you have connected the faulty Mac to a working Mac via Target Disk Mode the faulty Mac's harddrive should show up on the working Mac as an external drive (it took about 5 minutes to show up on my Macbook laptop). It will be greyed out and a message will be displayed on the working Mac saying that the drive needs to be repaired but it will allow you to access it and transfer any precious data etc.
Once the faulty Mac's drive appears on your working Mac you can launch Disk Warrior. You then need to select the faulty Macs hard drive and begin the reparing process. It doesn't take long to gather the information it needs, only about 10 minutes, and you will see a report (and it will show you any errors) and then you have the option to carry out the repair.
I carried out the repair on the faulty Mac's hard drive and had no problems. Once the repair was complete I saved a copy of the repair report (for future reference) and then disconnected the faulty Mac and restarted it (exiting Target Disk Mode).
It then loaded up my username with all the preferences in tact, with all my applications and data where it originally was like nothing had happened.
I am still going to return this machine as this problem occurs randomly and I don't ever know if the next time will be the last time I am able to save it. I hope someone finds this useful.