After doing an update doesn't want to start

I'm in the same boat. Just ran software update and there were updates for iTunes, Airport Utility, and two other things that seemed minor. After the download completed and I clicked restart, the screen went to the linen wallpaper and I looked up to see a vague error message which said something about the updates failing with a restart button. Upon restart I get the same kernel panic screen as you on two attempts. I have the 2011 27" iMac.

Update: I found this thread on the Apple forums:

https://discussions.apple.com/thread/4020063?start=0&tstart=0

And I'm following these instructions by BoySetsTheFire:

"Seems to be a problem.* Start up with the Command-R keys depressed.* Then select reinstall Lion.* This will reinstall Lion and leave all your files and prefs intact.* It gave me Lion 10.7.3.* Then run software update which moves you to 10.7.4.* If you run software update again, it will offer you Thunderbolt and iPhoto update.* DON'T DO IT!* Wait until we hear there is a fix from Apple."

 

The same here

This seems to be fairly widespread as there are multiple reports of it on Apple's boards.
It seems the only option is reinstalling Lion or restoring from a Time Machine backup if you have one. At boot, press and hold ⌘-R to get to Lion's recovery menu.

In 8 years, this is the first time I've ever had so much as a hiccup with an upgrade. This kind of crash is totally unacceptable and heads at Apple should roll for it.

This and a slew of bugs in recent OS X and iLife versions (iPhoto anyone?) has me wondering if quality has been slipping at Apple over the last couple years.

 

Also in the boat. I am starting your recommended procedure

Thanks for the procedure, I started same and hope it works. I am in the same boat and it's getting crowded.

 

I had this happen to me. I wiped the hard drive and did a fresh install via the internet recovery, which put me at 10.7.4 fresh. I applied the update and it worked fine this time around.

Early 2011 MacBook Pro

Edit: of note, I didn't reinstall iLife, so I didn't get any of the iPhoto, etc. updates so maybe that's related, not sure

 

After doing an update doesn't want to start

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I think wiping is a NO-NO.
Thank you very much "drimmen", I followed your procedure and worked out fine!! (only a very small hiccup on the road).
I repeat: "Start up with the Command-R keys depressed.* Then select reinstall Lion.* This will reinstall Lion and leave all your files and prefs intact.* It gave me Lion 10.7.3.* Then run software update which moves you to 10.7.4.* If you run software update again, it will offer you Thunderbolt and iPhoto update.* DON'T DO IT!* Wait until we hear there is a fix from Apple." (To me it gave Lion 10.7.4).
Well, what caused this dramatic incident was the small firmware update for Thunderbolt, which was not meant for iMacs.
When I ran now software update, Thunderbolt update was not longer there. Apple removed??