You might start with this Apple Support article:

http://docs.info.apple.com/article.html?artnum=106908

If the symptoms described don't apply to you then there are links to other articles on resolving start up problems. Finally, if none of those work I'd look at something like diskwarrior, otherwise you're probably looking at re-installing OS X

what happens if you type in

ls -a /etc/

at that prompt? If there's no master.passwd in there, you've got a little bit of an issue, and you might need to reinstall OS X.

Bear in mind that /etc is an alias to /private/etc, and it is that symbolic link that may have been deleted. If so the command above will return 'No such file or directory' even if the contents of etc are intact.