Fixed by going into 32bit mode sys preferences. It's funny how I'll be working on the problem for days, and figure it out right after I post in here.
Problem 2, when I start vmWare fusion it causes a kernel panic. In 10.6.0 I was able to avoid this by using an IOata kernel panic fix. But that is no longer working.
Also, I'm running on an AMD Phenom, 8Gb ram, Foxconn Destroyer, and in 10.6.0 I was using the Chocolate Kernel if it helps.