Under Lion, unable to log in with DisplayLink drivers installed
I have this problem as well.  However, I discovered that I WAS able to log in - the issue is the login prompt (and later some window content) was not displaying.

Once I plugged in the displayLink display, I was able to uninstall the driver.  However, the displayLink forum says this is due to a Lion issue with video drivers covered in this thread:  http://www.displaylink.org/forum/showthread.php?t=1059

So this needs to be address; I am out a display until this is fixed.