Fixed! First of all I just want to say, anything that may happen to your machine in the process of this repair tutorial is not responsibility. Now we have that cleared up lets get to the tutorial! Ok. Lets begin on why installing Xcode 3.2.5 will cause a kernel panic at boot. Xcode installs multiple components like CHUD kexts and all sorts of other kexts to enable system more system communication (from what I can make out) so things like iPhone Simulator run properly. But these kexts (as far as I know) are 32 Bit. How do I know this? Well they work on Lion which has 32 bit and 64 bit kernels which allows Xcode 3.2.5 to work on Lion.
Now we have that wrapped up lets get started! 1. First of all before doing anything try booting into the recovery partition on your Mac and using Disk Utility to repair permissions by holding down alt and booting into Recovery. Failing that, follow the steps below.
Dont worry your data is safe. Reboot your Mac and hold the shift key after the chime sound.
Now you should be in safe mode. Login and download
this file. What does this do? Removes all the CHUD components Xcode 3.2.5 installs which causes a kernel panic.
Once you have it downloaded, double click the dmg file and then you should see a folder named Utilities, click that and double click CHUD Remover and let it do its stuff.
In a few seconds it will notify you that it has finished doing what it does best, removing CHUD.
At this point you can reboot to see that your kernel panic has changed to something about AppleProfileFamily. This is another Xcode installed Kext which messes up your install. To remove it and fix the issue launch Terminal and type in this command (If something goes wrong past this point I do not hold any responsibility for anything that goes wrong) sudo rm /System/Library/Extensions/AppleProfileFamily.kext
Type in your password and press enter.
Now you can reboot into a working Mountain Lion install!