iMac Can Only be Booted in Safe Mode (Shift Key held down)

I still don't know if NBAR was suggesting I install Mountain Lion from another Computer (which I cannot do) or if he made a typing error and really meant to suggest I install from "any other HD, other than the iMac's internal HD." So I set about on the assumption the latter was true. I right-clicked on the Mountain Lion Installer app I downloaded from the App Store to Show Package Contents. I then opened the Contents folder and then the SharedSupport folder. In there I found "InstallESD.dmg", which is 4.4GB in size.

I then connected my FW800 external 750GB drive (the clone I made of my iMac's internal drive a couple days ago), and I was going to copy the DMG file to that external. But during the course of the copy, my screen froze. Drive access continued though, as did arrow cursor mouse movement. But clicking on things did nothing that I could see. This is the same sort of mysterious lockup I got back in 2010 while running Snow Leopard, which resulted in my taking this iMac to the Apple Store (which was still covered under AppleCare at the time), but the Apple Store folks here in Japan said they couldn't find anything wrong. So perhaps my video card has been flakey all this time and Apple Japan just lacked the know-how in 2010 to discover that? And now that my AppleCare is expired I need to pay the big bucks to fix that lingering problem?

I am seriously at my wits end.

Any further advice would be appreciated.

But please keep in mind I do not have DriveGenius3, nor am I convinced that paying $99 for it would diagnose my problem, especially since the latest version of TechTool does not.

Thanks.

NBAR, thank you for your replies. But I strongly recommend you take time now to flip to page one of this discussion and read all the posts made to date. That will bring you up to speed on literally everything, so I don't need to repeat anything.

In the meantime, I am presently installing Mountain Lion in my late 2009 iMac i7’s internal drive, using the installer app that I downloaded from the Mac App Store. After it completes, I will report back as to what happens at boot time. However, I am doubtful that this of format-and-install will magically solve whatever plagues this iMac. Again, please read through the early posts in this thread to better understand what I mean.

Thanks.

Gentlemen, I'm still here working in my poor old iMac. My eyes and brain are extremely tired, to say the least.

I was able to install OS X 10.8.3 on my late 2009 iMac's internal HD. But when I tried to boot, just as I reported before (read those previous posts for details), it locked up when the spinning spiked wheel vanished. I held the power button down and did another cold boot, this time with Shift held down. As always, it booted to the Desktop flawlessly in Safe Boot. I then restarted again and this time I did not hold down Shift. This time it booted me to the Desktop, but when I clicked on the Apple menu, it drew a 50% transparent menu and then everything except the arrow pointer froze.

So after all of this time and effort spent on reformatting my internal HD and installing Snow Leopard and then installing Mountain Lion, I am back to square one. I can only reliably boot in Safe Mode, whether that be my internal HD or a FW800 external.

Since I've spent many hours over the last few days scrutinizing every little thing on this iMac, I noticed one thing today that I never noticed before. If I get really close to the screen and look closely at various places, I can see what looks to be very faint marching ants. They are marching from the bottom of the screen to the top of the scream and there are several lines of them, spaced 1 cm apart, in various places on the screen. But again, they are very faint and hard to see. I only saw them because I was scrutinizing every last pixel on the screen and I just happened to see them.

NBAR, thank you for your continued assistance.

I have Console open, but there are a lot of different things to choose from. I assume you are either talking about "User Diagnostic Reports" or "System Diagnostic Reports," right? But there are 5 different reports under the "User Diagnostic Report" category, and all of those are a few days old. The only one that has today's date is under the "System Diagnostic Reports" header. I have made that available for you to view here:

http://kiramek.com/21test95/WindowServer_2013-04-20-180737_iMac-3.crash.zip

Note that I am currently booted into Safe Mode from off my external FW800 clone drive (a clone I made of my iMac's internal HD before I formatted it today).

Although I await hearing what NBAR has to say after viewing my Console Log, I nevertheless have convinced myself that my iMac has a serious hardware problem that I cannot remedy by myself. My wife is of the opinion that spending all that time and money on an Apple Store visit to get it repaired may all be in vain if the problem creeps up again a year or so down the line. And in light of the new parts being warrantied for only 90 days, she has a valid point. Furthermore, she advised me that having a MacBook Pro may be liberating for her, as she would not longer need to trek up to the second floor just to access our family iMac. I have an Airport Extreme Base Station, so WiFi in our home is not an issue.

Since my late 2009 iMac i7 is not completely dead, and since it works decently enough in Safe Boot Mode, I am curious if I can use this iMac in Target Display Mode in conjunction with a Retina MacBook Pro (by connecting the iMac to the Retina MacBook via an Apple Thunderbolt to Thunderbolt cable)? I've read that Thunderbolt is backward compatible with Mini Displayport, and the following thread indicates that such should be possible, although I am unsure if it would work when I have my iMac in Safe Boot Mode:

http://forums.macrumors.com/showthread.php?t=1405998

Although a MacBook would be liberating, we'd surely missing viewing our iPhoto photos and video on the large 27" screen. And since a Retina MacBook is quite expensive as it is, if I could use this existing iMac as an external monitor that would save me the cost of buying a separate Thunderbolt Display.

Thanks.

Sorry for me delayed response. I've been under the weather, most likely do to all the stress caused by this problem.

My hat is off to andyBall_UK though. Here is the exact thread with step-by-step instructions on how to disable the video card drivers:

https://discussions.apple.com/thread/3263472?answerId=16069150022#16069150022

I did exactly that, I then rebooted, and to my delight the iMac got to the Desktop!

So very clearly, it is my iMac's video card (an ATI in my case) that is "partly" bad. I still feel that the video card was most likely the cause of my freezing back in 2010 when I too my iMac into the Apple Store in Nagoya to get it checked out (which was free then because my AppleCare was still valid). But now that my AppleCare is expired, the video card itself decides to expire. Now I have to decide whether to pay Apple to do it, which means I'll be without a machine for at least a week, out gas money to and from the store, and out probably a few hours of my time; OR I could consider getting a replacement video card on EBAY and doing the replacement myself, which means I would have perhaps an hour of down-time.

Thanks to everyone who offered me your thoughts. I greatly appreciate your time.