Try the following:
Downgrade grub. Use the following command:
If you've manually modified any of grub's script files, back them up first.
sudo apt-get install grub-pc=1.98-1ubuntu5 grub-common=1.98-1ubuntu5
During the install process, replace all script file with the package maintainer's version when asked. Also install the bootloader to an MBR, ie: sda, sdb etc, NOT sda1,sda2,sdb1 etc.
NOTE: Do not re-boot unless you were ask were to install the bootloader to. If you were not asked, install it manually using:
If this helps you've found the problem, namely GRUB. If not, continue on.
sudo grub-install /dev/sda
Manually booting the kernel. Press 'c' at the boot menu and enter the following grub commands:
Assuming grub in on the first partition of the first drive, enter:
where hd0 is the first drive, hd1 the second etc, and 1 is the partition number of the root partition.
Load the kernel, enter:
where version is the kernel version, 2.6.32-23-generic etc. If you're not sure, press 'TAB' after 'vmlinuz-' and you'll get a list of all available versions. If there is only one version, the command will auto-complete.
linux /boot/vmlinuz-version root=/dev/sda1 ro
sda1 if root is on the partition 1 of th first drive.
Load the initramfs, enter:
where version should be the same as the kernel version. If it's not, you may have problems.
Now boot the kernel using the command:
If the problem persist, then the kernel is at fault. Try installing an earlier version of the kernel.
Let me know how it goes.