That means that your hard drive is {relatively} OK, and that your hardware isn't dead. Good.
Now, the suspicion shifts to the OS on your hard drive. We could do a bunch of stuff.
Start by Repairing Permissions on the drive, from Disk Utility. Then restart
Does the hard drive boot now? Or did it boot back into the Installer on the CD?
Then if it still fails to boot from the hard drive, I would do an Archive and Install from the OSX CD. (NOT AN ERASE!!)
This will preserve your user folder, programs and data, but install a new OS.
You follow the Installer prompts from the OS CD and when you get to Options, or Type of installation, choose Archive and Install.
(If you want to save some time, click on Customize and de-select from the list the additional language fonts, and the printer drivers for brands of printers you don't own.)
<paging Mad Jew -- please pickup the white courtesy telephone -- getting close to a time-zone handoff here... >