Here is a screenshot of the kernel panic I get. 10.6.7 worked flawlessly with me so wanted to take the plunge to 10.6.8 thinking it would be just as easy.... Guess I was wrong.

Interesting thing is that on top it says 64 bit mode enabled but I specifically added the flags to boot in 32 bit mode (arch=i386). Could that be related somehow?

Any help would be greatly appreciated.