iMac Won't Boot

I have a 27 inch iMac which will no longer boot. The grey screen with Apple logo appears followed by a spinning cog. However, when spinning cog disappears, the mouse pointer does not appear and the screen remains grey with the Apple logo in the centre. It will start from the recovery disk to allow me to repair the internal disk and it will start in safe mode which will allow me access to the user data. It will not start from a clone on an external hard drive which starts my laptop normally i.e. the clone works as expected.

So far I have tried the following, some of which I suspect were completely unnecessary!

1) I have repaired the disk- no faults were found

2) I have repaired permissions

3) I have reset the PRAM

4) I have reset the SMC

5) In safe mode I have set up a new user. It will not boot into this user

6) I have reinstalled Mavericks

7) I have deleted all startup items (though there were none in the new user and it still wouldn't boot there)

8) I have tried with all peripherals disconnected leaving only the wired keyboard & mouse.

As the computer runs as expected in safe mode I am assuming this is a software issue. I would be glad of any other suggestions you can make before I take it to an Apple Store for investigation.