TS4135 Imac freezes but mouse still work.

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My Imac freezes everytime I try to load an app. Rather its a webpage on safari, playing videos on sites, iTunes, photobooth etc. I can't even load the applications folder without it freezing on me. The dock & keyboard shortcuts are frozen too. The only thing that moves is the mouse cursor, but its no good if I can't open or close anything. I wiped out my Imac to factory settings, thinking it would clear ram/men space and that didn't help. Sigh. I need help. What can I do? What should I do? Is this a firmware or system update problem? Help me please!
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Please read this whole message before doing anything.
This procedure is a diagnostic test. It won’t solve your problem. Don’t be disappointed when you find that nothing has changed after you complete it.
Third-party system modifications are a common cause of usability problems. By a “system modification,” I mean software that affects the operation of other software — potentially for the worse. The following procedure will help identify which such modifications you've installed. Don’t be alarmed by the complexity of these instructions — they’re easy to carry out and won’t change anything on your Mac. 
These steps are to be taken while booted in “normal” mode, not in safe mode. If you’re now running in safe mode, reboot as usual before continuing. 
Below are instructions to enter some UNIX shell commands. The commands are harmless, but they must be entered exactly as given in order to work. If you have doubts about the safety of the procedure suggested here, search this site for other discussions in which it’s been followed without any report of ill effects. 
Some of the commands will line-wrap or scroll in your browser, but each one is really just a single line, all of which must be selected. You can accomplish this easily by triple-clicking anywhere in the line. The whole line will highlight, and you can then copy it. The headings “Step 1” and so on are not part of the commands. 
Note: If you have more than one user account, Step 2 must be taken as an administrator. Ordinarily that would be the user created automatically when you booted the system for the first time. The other steps should be taken as the user who has the problem, if different. Most personal Macs have only one user, and in that case this paragraph doesn’t apply. 
Launch the Terminal application in any of the following ways: 
☞ Enter the first few letters of its name into a Spotlight search. Select it in the results (it should be at the top.) 
☞ In the Finder, select Go ▹ Utilities from the menu bar, or press the key combination shift-command-U. The application is in the folder that opens. 
☞ Open LaunchPad. Click Utilities, then Terminal in the icon grid. 
When you launch Terminal, a text window will open with a line already in it, ending either in a dollar sign (“$”) or a percent sign (“%”). If you get the percent sign, enter “sh” and press return. You should then get a new line ending in a dollar sign. 
Step 1 
Triple-click the line of text below on this page to select it:
kextstat -kl | awk '!/com\.apple/{printf "%s %s\n", $6, $7}' | open -f -a TextEdit 
Copy the selected text to the Clipboard by pressing the key combination command-C. Then click anywhere in the Terminal window and paste (command-V). A TextEdit window will open with the output of the command. If the command produced no output, the window will be empty. Post the contents of the TextEdit window (not the Terminal window), if any — the text, please, not a screenshot. You can then close the TextEdit window. The title of the window doesn't matter, and you don't need to post that. No typing is involved in this step.
Step 2 
Repeat with this line:
{ sudo launchctl list | sed 1d | awk '!/0x|com\.(apple|openssh|vix)|org\.(amav|apac|cups|isc|ntp|postf|x)/{print $3}'; sudo defaults read com.apple.loginwindow LoginHook; sudo crontab -l; } 2> /dev/null | open -f -a TextEdit 
This time you'll be prompted for your login password, which you do have to type. Nothing will be displayed when you type it. Type it carefully and then press return. You may get a one-time warning to be careful. Heed that warning, but don't post it. If you see a message that your username "is not in the sudoers file," then you're not logged in as an administrator. 
Note: If you don’t have a login password, you’ll need to set one before taking this step. If that’s not possible, skip to the next step. 
Step 3
{ launchctl list | sed 1d | awk '!/0x|com\.apple|org\.(x|openbsd)/{print $3}'; crontab -l 2> /dev/null; } | open -f -a TextEdit 
Step 4
ls -A /e*/{la,mach}* {,/}L*/{Ad,Compon,Ex,Fram,In,Keyb,La,Mail/Bu,P*P,Priv,Qu,Scripti,Servi,Spo,Sta}* L*/Fonts .la* 2> /dev/null | open -f -a TextEdit  
Important: If you formerly synchronized with a MobileMe account, your me.com email address may appear in the output of the above command. If so, anonymize it before posting. 
Step 5
osascript -e 'tell application "System Events" to get name of every login item' | open -f -a TextEdit 
Remember, steps 1-5 are all copy-and-paste — no typing, except your password. Also remember to post the output. 
You can then quit Terminal.