What happens if, instead of CTRL+Alt+F# to go to another console login, you instead type CTRL+Alt+Backspace to restart the X server?
Or, rather than even bothering to use the logout menu/panel button, just open a terminal, su to root, and type 'reboot' (I know you're trying to log out, but a problem like this seems to call for a reboot, since you're trying to get out of the old kernel and boot the new one).
Once you've rebooted to the new kernel, perhaps your problems will sort themselves (possibly to be replaced by new ones, but even that's progress
).