Kernel Panic Startup

my 3+ year old macbook is unable to startup anymore. whenever i boot up, after the apple logo i get the Kernel Panic. This happened after one time when i forced shutdown after i thought my macbook crashed.
I've read from past threads this is possibly to do with hardware problems, but i can still boot to bootcamp windows (which im currently using) and all seems to work fine.
What can i do?

 

thanks, yes i can boot into the leopard install disc and tried repairing disk permission with not much help. also tried resetting PRAM.
Things i cant do: boot to safe mode (hold Shift), or hardware test (hold D at startup). i think i will try to reinstall from the disc (hopefully this wont erase all my files).
Im hoping its not a hardware issue because windows bootcamp seems to run just fine.