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I updated recently to the new initscripts and had some problems with it, The pacman update changed /etc/inittab to an empty file, and /etc/inittab.pacnew was empty as well. I modified /etc/inittab.pacsave to change the vc's to ttys.
This worked a little better, though now it apparently hangs when trying to enter runlevel 3 or 5.
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Can you post your new /etc/inittab (assuming you copied the inittab.pacsave)?
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