No idea about your problem (sounds more like an OS problem then a shapeshifter problem - the same thing happened to me back on Panther when I updated to 10.3.3, it would boot and log me in but just beachball and not load anything such as the dock or Finder (I even left it on for a few hours to see if it was just being slow)), but I thought I'd point out you don't need to restart to "finish" installing ShapeShifter, just log out and then back in.