If the following suggestions work, please let me know and you can Accept the answer (and if possible, leave positive feedback). If not, please DO NOT Accept the answer. Instead, let me know and we'll try some more things or I can refer you to another Expert who may be able to help you further.
If you are unable to start from the disk in the internal drive, then you may need to try to start from it in an external USB DVD drive such as this one for example:http://www.newegg.com/Product/Product.aspx?Item=N82E16827136158
What you did with your prompts in SingleUser mode was remove the file that the computer looks for when starting the computer that would have been there showing that the computer has already been setup. This will in essence make the computer think it has never been setup before. This will allow you to setup a new password XXXXX user. Not really what you are looking for.
However, if you did not first enter fsck at the prompt, I don't believe this would have been executed properly.
So, to get you through this and back to an operating computer, I think your best bet at this point is to first try to repair the System.
1) Insert the Mac OS X install disk.
2) Shut down the computer.
3) Start the machine while holding the C key immediately after pressing the power button (Don't let go of the "C" until it starts from the disk or locks up). If you have to choose, select the Installation disk as the startup.
4) When it starts, select your language, then DO NOT continue the Installation process.
5) Just go to the Utility menu in the top menu bar. Choose the "Disk Utility" program.
6) Run Disk Utilities. Select your hard drive in the column on the left and "Verify" the Hard Drive.
7) Repair any errors that it may find by next choosing the "Repair" button.
8) When finished quit the program and restart the computer normally.
9) If it starts properly, stop here and go back to my previous instructions about how to properly reset the password. If it does not start normally, then let's try to repair the system from the Single User Mode below:Run fsck in Single User Mode
1) Start the mac and hold down the apple key (Command) and the S key until the machine starts into Single User Mode.
2) After the Apple logo (if the hard drive can mount), it will have a black screen with white text. You can release the apple key and the S key. When it finally stops loading and you are given a prompt, type this command (in bold) EXACTLY(there is only a space between "k" and "-") and then press return:/sbin/fsck -fy
fsck will go through five "phases" and then display info about your hard disk's state. Once it finishes, it'll display this message if no issue were found:** The volume (name_of_volume) appears to be OK
If fsck found issues and has done anything, it will display this message:***** FILE SYSTEM WAS MODIFIED *****
If the above message appears, repeat the fsck command until fsck tells you that your volume "appears to be OK"
The first-pass repairs may uncover additional issues, so it's normal to have to do it more than once.
3) When fsck reports that your volume is OK, type the following (in bold) EXACTLY and press return:reboot
4) If it starts properly, stop here and go back to my previous instructions about how to properly reset the password. If it does not start normally, then it's time to consider an "Archive and Install" of the Mac OS X.ARCHIVE AND INSTALL
The "Archive and Install" option on reinstalling the Mac OS X will preserve your user data and files, but you may need to reinstall third party software and fonts. Because of this, if you do not have a good backup of the hard drive, you may want to explore other options first.
There is a comprehensive website detailing the Archive and Install process online. I recommend you read through it thoroughly before proceeding.http://www.thexlab.com/faqs/archiveinstall.html