hi,
I have the initdefault set to 2 in /etc/inittab. Changing this to 3 or 5 does not help.
check if you have a symlink which looks like S99kdm in /etc/rc2.d/ if it is not there then create it, it should point to /etc/init.d/kdm
What is the version of XServer that you have installed, on new systems you should have atleast version 3.3 installed.
while running "dpkg-reconfigure xserver-xfree86" try selecting vesa as your display driver.
Hope this helps
Shashank