I have a similar problem, although it simply appears to hang. If i hit enter then I can log in using a text interface (user: "jack", password: "jack" - what a guess!).
If i try to start Xwindows manually (startx), it says that no screen could be found.
I was using osol-0906-livecd.iso as the boot image. It works fine on the mac hardware natively, just not in the VM.
