iMac won't boot

My iMac refused to wake up when I turned it on yesterday morning. No prior symptoms (other than the maybe unrelated red and green squares reported in another thread) had appeared before this.

Here are the details:

System: October 2010 iMac, 2.8GHz, 27”, 4 GB RAM, 1Terabyte HD. OS version 10.8.5 Mountain Lion.

Symptoms: On power up the machine makes the normal startup sounds, it tries to boot (hard drive makes its usual noises), then what appears to be a debugger dump covers much of the screen. A few seconds later the machine reboots again and the cycle repeats.

The first line of the debugger information says:

Panic (cpu 1 caller: 0xffffff801271f15d): “jnl: transaction too big (83855024 )= 8388096 bytes, bufsize 4096, tr 0xffffff801e5e8f48 bp 0xffffff8086eb5990)\n”@/SourceCache/xnu/xnu-2050.48.12/bsd/vfs/vfs_journal.c:26 41

The rest of the debugger information includes addresses, OS information, etc.

Here is what I have tried so far:

- I removed all external devices (printers, scanner, USB external hard drives.

- I used Option key during boot to select the boot device. In each case, the system would try to boot from that device, but it would fail. Devices tried include the bootable installation CD, a bootable USB hard drive, and the system drive.

- Other things I tried:

Command – Option –P – R to reset parameter RAM (PRAM). This had no noticeable effect.

D key during bootup SHOULD run the Hardware Test, but it had no noticeable affect. The system continued to try to boot, reset, and then start over again.

Command – S does start the Single User Mode. This puts the system in the Terminal mode, where commands seem to work OK. I can view file directories, etc.

The check disk command /sbin/fsck –fy runs properly and reports that “The volume System Partition appears to be OK.”

Typing REBOOT in the Single User Mode causes the system to attempt to boot, but then it goes through the same repetitive error cycle again.

Any suggestions as to what might be wrong or how to diagnose this further? The nearest Apple store is 3 hours away, so dropping into the Genius Bar is not a viable solution. There is an independent store offering authorized Apple service 60 miles from here, but I shudder at the thought of dropping $$$ for a new logic board if this is something I can diagnose and fix myself.

I appreciate any suggestions or encouragement!