24" iMac will only boot in safe mode

Question

Here is the short version:
I have a 24" iMac Core 2 2.16 GHZ with Lion installed (has been for a long time).  It will only boot successfully in safe mode.  The AHT Extended tests do not report any problems.  I have reset PRAM and SMC.  Nothing helps.  Normal boot process will get to the point where it switches from the Apple logo with spinning wheel to where it would normally switch the OSX GUI and login screen.  Instead the screen is all white or gray.  The exact same problem happens if I try to boot from an OSX Install DVD or USB and also my DiskWarrior DVD.  Since safe mode works, my guess is that the problem is with the video card and the normal color depth that the Mac boots to.  In Safe Mode it is in reduced colors.
Since safe mode works, I have all of my data backed up to an external drive.  If I could boot from an install disk, I would have already wiped the disk and done a new install, but I cannot do this!  I am assuming this is a hardware problem and given the age of this iMac I am out of luck.  I ordered a new system last night, but if it is possible to get this one working again, I would like to be able to give it to a relative who could use it.  So if anyone has any ideas, it would be appreciated.
Just slightly longer version:
Been using this system since 2007.  Used to use it for work, now it is the home media hub where we sync our iOS devices.  It has had Lion installed for probably a year now and has always worked great.  A few weeks ago, it started locking up whenever my son was playing Minecraft.  I would have to power off the system to get it back.  I assumed it was a Java problem.  I tried fixing disk permissions etc. but nothing solved it.  Anyway, last week I was downloading App updates in iTunes when the system locked up again.  The mouse would move around but I could not Force Quit anything or really do anything.  So I had to power off the system.  That is when the boot problems started.  Since that happened, the system has not come back with a normal boot.
Thanks for any ideas/help.  If someone thinks this is fixable, I can bring it to my local Apple service dealer.  I do not want to pay them $100 just to have them tell me it cannot be fixed or needs a new logic board or something like that which would not be worth buying.
Mark

Answer 1

Please read this whole message before doing anything.
This procedure is a diagnostic test. It won’t solve your problem. Don’t be disappointed when you find that nothing has changed after you complete it.
Third-party system modifications are a common cause of usability problems. By a “system modification,” I mean software that affects the operation of other software — potentially for the worse. The following procedure will help identify which such modifications you've installed. Don’t be alarmed by the complexity of these instructions — they’re easy to carry out and won’t change anything on your Mac.
These steps are to be taken while booted in safe mode.
Below are instructions to enter some UNIX shell commands. The commands are harmless, but they must be entered exactly as given in order to work. If you have doubts about the safety of the procedure suggested here, search this site for other discussions in which it’s been followed without any report of ill effects.
The commands may line-wrap or scroll in your browser, but each one is really just a single line, all of which must be selected. You can accomplish this easily by triple-clicking anywhere in the line. The whole line will highlight, and you can then either copy or drag it. The headings “Step 1” and so on are not part of the commands.
Launch the Terminal application in any of the following ways:
☞ Enter the first few letters of its name into a Spotlight search. Select it in the results (it should be at the top.)
☞ In the Finder, select Go ▹ Utilities from the menu bar, or press the key combination shift-command-U. The application is in the folder that opens.
☞ Open LaunchPad. Click Utilities, then Terminal in the icon grid.
When you launch Terminal, a text window will open with a line already in it, ending either in a dollar sign (“$”) or a percent sign (“%”). If you get the percent sign, enter “sh” and press return. You should then get a new line ending in a dollar sign.
Step 1
Triple-click the line of text below to select it. Copy the selected text to the Clipboard (command-C). Then click anywhere in the Terminal window and paste (command-V).
find /Sy*/L*/Ex* -type f -name Info.plist -exec sh -c '/usr/libexec/PlistBuddy -c "Print :CFBundleIdentifier" "$1" 2> /dev/null | egrep -qv "apple|Accusys|ArcMSR|ATTO|CalDigit|HighPoint|hp-fax|JMicron|print|SoftRAID|stex" && echo ${1%*.kext/*}.kext' {} {} \;
Post the lines of output (if any) that appear below what you just entered (the text, please, not a screenshot.) You can omit the final line ending in “$”.
Step 2
Repeat with this line:
ls -1A /e*/mach* {,/}L*/{Ad,Compon,Ex,Fram,In,Keyb,La,Mail/Bu,P*P,Priv,Qu,Scripti,Servi,Spo,Sta}* L*/Fonts 2> /dev/null
Important: If you formerly synchronized with a MobileMe account, your me.com email address may appear in the output of the above command. If so, anonymize it before posting.
Step 3
osascript -e 'tell application "System Events" to get name of every login item' 2> /dev/null
Remember, these steps are all copy-and-paste — no typing. Also remember to post the output.
You can then quit Terminal.