Login screen freezes after the Lion 10.7.1 update
If you have another mac at home, I recommend using the OS X Recovery Disk Assistant to clone the recovery partition. Then just insert the USB into the non-functional Mac and boot from the USB, as this will allow reinstallation of the OS.

Tip: only use these steps if the built-in recovery partition is not accessible. After taking these steps I would strongly recommend that you upgrade your OS (preferably to Mavericks) if you don't want this to happen again.