After updating my iMac with the latest security updates from Apple. My iMac was caught in this endless loop where the Setup Assistant Wizard kept reloading each time and not booting into the OS. Here is the solution I found on the Apple Discussion Boards.

1. Do a hard reboot on your iMac by holding the on/off button on the back of the monitor.
2. As soon as it reboots, hold down the shift key and Leopard will boot into safe mode. Be patient this may take a few seconds.
3. When you see the login screen, press the Back button.
4. Next, click the Reboot button and your iMac should reboot normally.