have you tried starting the machine up in single-user mode?
-> reboot while holding down Command-S
if it boots successfully into single-user mode, try some of the [http://support.apple.com/kb/TS1411?viewlocale=en_US|troubleshooting suggestions listed here] e.g. items 4 and beyond in that list
I can't think of a specific failure leading to your symptom, but above is worth a try. pulling the PRAM battery has worked for me in the past.
good luck, I hope you can get your Pismo working again, it's a great machine! mine is 9 or 10yrs now and although quite slow it still runs