Hi,
I have this same problem, and no combination of combo updates or repair permissions has fixed it.
I have a 2 x 2.66 GHz dual-core Xeon Mac Pro with an NVIDIA GeForce 7300GT GPU.
After the 10.6.8 update through Software Update yesterday things were working fine all evening. This morning, the computer booted and after a little while stopped responding. The cursor was a beachball (though it did move) and the system didn't respond to keyboard input at all (including Cmd-Option-Esc). I waited for a while and then did a hard reboot. It went through the full boot process, but instead of bringing up the desktop, it just brought up a gray screen with a cursor that alternates between beign responsive and being a beachball. The computer boots fine into Safe Mode, and I was able to repair permissions. I downloaded and installed the 10.6.8 Combo Update, repaired permissions again, and reset the PRAM and NVRAM for good measure, but I'm still in the same situtation:
The computer boots into a gray screen and a cursor, or I can get it to boot properly in Safe Mode.
Any suggestions?
Thanks.