you may also add the following lines to /etc/hosts

127.0.0.1 localhost
127.0.0.1 yourhostname

After changing /etc/network/interfaces and /etc/hosts, I no longer see
the stalling at the initializing system services(the second icon). Well, it
is not a stall but it takes a long while then it comes up with a blank
desktop with no icon, no task bar. And like you said, once I remove the
network card(mine is PCMCIA), everything works again.