Grey screen after new user creation.

If 10.7.0 or later...

Bootup holding CMD+r, or the Option/alt key to boot from the Restore partition & use Disk Utility from there to Repair the Disk, then Repair Permissions.

Then maybe try a safe boot to login as the other admin user...

Safe Boot, (holding Shift key down at bootup).

Did Safe Boot give you the option to try the older user to loginto?

What backups do you have?

If you have already attempted to reset power management, repair permission and the disk, and safe boot and you are still unable to reach the desktop for your system, then your best option will be to reinstall the operating system. While that sounds like an inconvenience or even worrisome as you can't get to your desktop to retrieve anything, rest assured that the operating system is kept on a separate space with the recovery partion, so that only the operating system itself is reinstalled while all of your apps, documents, data and applications remain in tact. Simply boot into the recovery partion by holding Cmd+R and select reinstall Mountain Lion. Make sure that your Mac is connected to the internet via ethernet cable and it will download the installer and reinstall the system on your device. At the longest, the process can take two hours, but if your internet connection is swift enough, it can be a significantly shorter time. Sorry to hear that you are having to deal with this pain. I recently had that issue myself with my Mac Mini running 10.7.5. All the best.

When you booted in Recovery mode, were you able to unlock and mount the volume? If not, and you have no backup, and you care about the data on the volume, you're in a data emergency. STOP whatever you're doing and get expert help.

If you want to preserve the data on the boot drive, you must try to back up now, before you do anything else. It may or may not be possible. If you don't care about the data, you can skip this step.

There are several ways to back up a Mac that is unable to fully boot. You need an external hard drive to hold the backup data.

1. Boot from the Recovery partition or from a local Time Machine backup volume (option key at startup.) Launch Disk Utility and follow the instructions in this support article, under “Instructions for backing up to an external hard disk via Disk Utility.”

2. If you have access to a working Mac, and both it and the non-working Mac have FireWire or Thunderbolt ports, boot the non-working Mac in target disk mode. Use the working Mac to copy the data to another drive. This technique won't work with USB, Ethernet, Wi-Fi, or Bluetooth.

3. If the internal drive of the non-working Mac is user-replaceable, remove it and mount it in an external enclosure or drive dock. Use another Mac to copy the data.