Desktop keeps reloading - Can't open Applications

Allright, so I finally got my hackintosh working, and things were going pretty smoothly for a week. However, while I was working with xcode and the iPhone simulator, a bug in my code caused a kernel panic.

Fine, I thought, not the first time this has happened. I'll just reboot.

To put it simply, No. Things went completely wrong. Here are the symptoms:

• Background image won't load
• Applications look like normal folders (can't run them either)
• Pressing most keys on the keyboard causes the desktop to reload
• Booting into safe mode yields the same results

I've tried booting into single user and running fsck, booting the snow leopard install disk and repairing both disk & permissions, and deleting user cache and preferences.

Normally I find my solutions by googling around, but at this point I'm quite clueless. Any help would be greatly appreciated.

I'm still not sure what was causing the problem, but I got it working again.

Booting into safe mode worked again (not sure why), and using Terminal I renamed /Library/Preferences to /Library/Preferences_old, and renamed /Library/Caches to /Library/Caches_old.

After that I repaired disk permissions using Disk Utility, which created the folders I renamed from.

This seemed to do the trick. Hopefully it'll help someone else.