OK: Update.

I tried resetting the PRAM. Nothing. Wouldn't boot in safe mode either.

I booted from Verbose mode. I got the following (it hangs here):

ATIRage128: Using AGP

AirportFirmware: start Sta f/w download

disk0s2: I/O Error.

Workaround Bonjour: Unknown error: 0

disk0s2: I/O Error.

disk0s2: I/O Error.

disk0s2: I/O Error.

disk0s2: I/O Error.

disk0s2: I/O Error.

Any ideas? Remember, everything passed the Apple Hardware Test.