System hangs on Boot-up at Run level 3
 

Hey all,
I have a Linux machine
Machine: Intel Pentium 4, EM64T with Red Hat Enterprise Linux WS 3.0 for EM64T (64 bit distribution) Kernel: 2.4.21

The machine hangs up during the boot-up process at run level 3 (I think). I asked my system administrator to look into it, and he did the following steps, but I think we really need help now ... My work is on hold! So any help would be greatly appreciated.

Below are listed the steps that were used to try and see what is going on:

Here's a few things that the system admin. tried:
1. Tried to boot up from CDROM but that was giving soem problems because of the hardware configuration (even with the CDROM drive as the primary drive)
1. Changed the default shell for "root" in /etc/passwd from /bin/bash to /bin/tcsh. This had no effect.
2. Changed the password for "root" in /etc/shadow to "*". I believe this is the equivalent of having a blank password. This had no effect.
3. Observed that attempting to login with an invalid username or password has the same effect as trying to login with a valid username and password--things hang !!!
4. Changed the default run level in /etc/inittab from 5 (X11) to 3 (multi-user). The boot process already seemed to be stopping at run level 3 anyway, so this didn't really make any difference either.
5. Can still login in single-user mode (also known as run level 1).

It doesn't seem like the login process ever progresses to where it checks the passwords.

Any help/pointers are appreciated.
Thanks
Ayush