I upgraded kernels last night from 2.6.26 to 2.6.27. I did the same process as before and I have rebuilt kernels about a thousand times.

But during the boot process, it would hang at the step that starts with /etc/urandom.

A quick search didn't turn anything up. I understand what /etc/urandom is for and I don't understand why a computer would hang up there. I have never heard of this problem before. Anyway, there was no kernel panic. It just sat that way for seven hours.

When I tried to reboot my old kernel [the one I had been using before for a month or two] it would hang in the same step.

This leads me to believe it isn't the kernel if neither will boot properly.

Any ideas?

You need to replace /etc/rc.d/rc.udev with /etc/rc.d/rc.udev.new. Apparently something was changed in the latest udev and it does not like /dev/urandom during startup.

Will the rc.udev.new be blank?

I'm not sure if I understand what you mean. What I told you is to replace the current rc.udev with rc.udev.new. Make a backup of your current rc.udev just in case:

Is this a necessary step everytime that udev is upgraded?

It is considered good practice to always check for .new files after upgrading packages.
Ideally, you should check the current file with the .new file and analyze the differences.

I use slackpkg for keeping my systems up-to-date and this tool checks for the existence of .new files and offers to show the differences.

Slackpkg is included in the 'extra' folder on the Slackware CD or DVD.

i guess changing with new .new file won't hurt, unless you totally modified the config file. In that case, you will have to merge both files.

I have used 2.6.27 and it boots fine here (also using udev-130)