Having problem installing Moutain Lion.

[eep357]

Unfortunately, repair disk permissions is greyed-out in disk utility. Any other suggestions?

you need to "get info" and uncheck the box for "ignore ownership on this volume" or repairing permissions won't be available in Diskutility, and with Kext Wiz or Kext Utility, they won't actually repair anything and will just go through the motions in vain. Also before repairing permissions, the owner of volume needs to be System:Wheel with permissions 755, do not apply the same ownership/permissions to any sub directories. It's because of these kexts tools ability to look like they repaired permissions, along with Disk Utility doing the same fake repair to RAID Volumes in Lion(known bug, unsure if ML fixed this) I no longer trust any of them and repair from command line:

diskutil repairPermissions /

or

diskutil repairPermissions /Volumes/NameOfTheVolume/

Note the capitol "P" in repairPermissions as it is required syntax for command to work

 

note: I did not read your full topic as to what the problem is, just chiming in on permission repair in general