I followed the All-In-One guide by rockinron_1 here to install OSX from a USB thumb drive:
The install went just fine and I booted again to copy the 2 kexts as per the guide (FakeSMC and NullCPU...), ML booted just fine no kernel panics.
So then I restarted to see if I could boot directly from the hard disk with OSX on it (and not from the thumb drive) and I got boot0 error (bad install of chameleon it appears). So I booted again from USB and selected the installed OSX partition and then went and installed Chameleon to the hard disk with OSX on it, rebooted, and chameleon seemed to work.
So I typed -v to see the logs and a kernel panic came up just before the point where OSX completely loaded, and here it is attached.
Why would I be able to boot from the USB thumb drive and not directly from the disk?
Problem solved by using SMBIOS.plist of iMac 10,1 (Core 2 Duo) as per this topic with the same kernel panic:
I generated the SMBIOS with Chameleon Wizard with the help of this guide:
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