If it will boot using the OS X disc, you can run Disk Utility to repair permissions and repair the HD files.
Will it boot OK in Safe Mode? See What is Safe Boot, Safe Mode? (Mac OS X)
http://docs.info.apple.com/article.html?artnum=107392 Takes a while to run, but it usually "fixes" problems.
Safe Boot takes longer than normal startup
Resolve startup issues and perform disk maintenance with Disk Utility and fsck
Hi, Thanks a million Tom! I don't know how it did it, but it worked. I don't think Safe Boot was even needed. Come to think of it, I was initally concerned that even the OS X disc might be rejected. I guess the laptop recognizes first aid when it's administered!
What would the Apple community do without help like yours?
Happy holidays - you certainly made my day...