TS3680 Getting grey Apple logo and progress circle upon startup after removing "Everyone" as rights to Local HD

Hello, I am having trouble starting my 21" iMac running Snow Leopard after I had shared the HD with my MB-Pro. I had removed the "everyone - Read Only" rights on the HD (on the iMac) and opened sharing so my MB could attach to it. Grey Apple Logo and progress circle upon startup now.
Can changing these rights cause the system to not boot? I can go into single user mode but I am not sure what to do then. Any suggestions would be much appreciated.

See section A1 of this user tip by Niel:
I accidentally set a disk's permissions to No Access

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