It’s all over the blogs today: Apple screwed up bigtime with the software update for Macs with Thunderbolt ports. Many, if not most, people who apply this update find that their Mac crashes on startup, either into a kernel panic, or just stops at the grey screen.
If you have one of these Macs, DON’T DO IT. Just quit Software Update and wait until Apple fixes this mess.
If it’s too late, you can fix things by booting into the Recovery Partition by holding down the R key after hitting the power button. Connect to your network and tell it to Reinstall Lion.
If you have a second Mac also running Lion, you can put the dead one into Target Disk Mode (restart while holding down the T key) and then plugging it into the second Mac with FireWire. Then reinstall the 10.7.4 Update. Obviously this will not work unless both Macs have a FireWire port.
If you want to read what others are writing, start with TidBITS, then Google “Thunderbolt Software Update” for the rest.
If you have been maintaining a SuperDuper clone backup, you can also start from that and clone it back over the damaged internal drive. That’s the best solution and why I always recommend you have both Time Machine and a clone backup.
Addendum: As of 11am PDT, Apple pulled this from Software Update.