I have had the panic screen before. And yes, i nearly did panic. Anyway, when none of my attempts to get around it seemed to work, i did the following: I started up with the mac os X cd and the option key pressed (maybe option AND c key, i forgot). Then I got to the screen where you can choose your startup drive. I choose the cd and was able to fix it after that. I reinstalled osx though. Also, make sure you don't have anything connected to any usb ports (except your keyboard of course).
good luck!
