Mac OS X Server 10.0: Blue Flashing Screen at Login Window

A particular privilege change to the root level of the server startup disk causes the server to stop responding at the Login Window.
Symptom

During startup, the server stops responding at the Login Window. You see a flashing blue screen.


Solution

This occurs if you change the privileges on the root level of the server's startup disk to take away read access for "Everyone." Follow these steps to resolve this issue:
Published Date: Feb 17, 2012