Mac Pro almost boots but fails at the Finder

My relatively old Mac Pro suddenly fails to complete the boot up cycle, you get the Apple Logo OK, some disc drive whirring, then a blue screen for a few seconds, then a grey (white ?) screen with a cursor top left. After a few more seconds, you'd expect the finder to appear but the strangest thing happens - If you move the mouse, the cursor arrow splits into two arrows - one is fixed in the top left corner where it first appeared, the other you can move around the screen with the mouse in the usual way, this second mobile arrow then turns into the revolving beach ball of death indicating something has crashed. Thats as far as the display goes, the Mac then carries on whirring its disc drive almost as though its finishing booting up for a few more minutes, then quietens down. But all you can see on the display is the Beachball.

Now, Ive tried all sorts of boot options, including safe Boot, resetting the NVRAM, disconnecting all peripherals, and the really worrying one - I tried to boot from the emergency CD ROM (OSX10.6) and the same thing happened - gets to the same point in the cycle then grey screen and Beachball. All the remaining options on the forums run out at this point, because they assume you can boot from the CD, like performing a factory reset, checking the disc drive with the disc utility etc.

One thing I have tried is booting from the hardware test CD that came with the Mac, this tells me the hardware is all fine …..???

Would be very grateful for any help on this one……….