Compressor stalled, now iMac can't start unless in Safe Mode

My iMac Intel 2.8GHz has developed a serious issue.
On bootup, once it gets to the logon screen, the display wipes down and the 'You must restart ... hold the power button...' message comes up. (I can't remember the correct name for this kind of 'crash.)
I never even get to actually log on.
I can start up and operate in SAFE MODE successfully.
I have booted from the install disc, run Disk Utility, repaired the disk and repaired Permissions.
I have also run the full or extended hardware test and this showed no errors. (I was concerned there was a memory or RAM error.) Also, there is plenty of room on the HDD.
The last thing I was doing when the fault developed, was running a batch in Compressor. It got to item 7 of 8 and was taking a ridiculously long time to finish. I tried to cancel the batch but that was taking just as long; as in, never completing the cancel, even after I let it run overnight. The batch should have taken less than 1 hour. After forcing quit, and rebooting, the batch always tried to continue - as it does - but always appeared stuck in a loop.
The only thing I haven't tried is reinstalling the OS in case a system file has been corrupted. I'm loathed to do this unless advised, because of the time it will take to re-do all the updates to get back to where I am.

Any ideas would be appreciated.
Thanks,
Neil.