I can't tell you what is wrong -- obviously -- but I can tell you how to start debugging. Before I do, I'd also like to suggest that you try to boot a Knoppix CD. Since its a Debian port, its config files can be used to replace the faulty one you're trying to identify.
To identify the trouble you are having -- which may be that you've got an incorrect module compiled into the kernel -- remove hardware that you do not need, in order to boot. IN other words, remove everything except the hardware that supports the monitor, keybaord and mouse. Then, add it back, one card at a time to determine if it is a particular card. Seems like -- one way or another -- it will boil down to hardware.
Hope this helps.