What happens when you specify the CD-drive using the System Prefs (Startup Disk)? Can you restart from the CD?
If you can, be sure to run the Disk Utility app, and on top of that I'd suggest doing an archive and install. Something is obviously very wrong. You'll have to reapply the updates, but better that than future hassles.
If the above doesn't work, hold down the Command + S keys during startup until you can run "fsck -y", which is the same thing as running the disk utility from the CD. Also, I'd suggest using Open firmware to reset the PRAM, the instructions are in KB# 42642:
USING OPEN FIRMWARE:
1) reboot while holding option-command-o-f (boot into open firmware)
2) type: reset-nvram (return)
3) type: reset-all (return)
4) the Mac should restart on its own, if the commands have been typed correctly.
http://docs.info.apple.com/article.html?artnum=42642
PS: Am I correct in assuming you're a Wodehouse fan?