You learned one of the painful lessions of non-linear editing. Never update your system while in the middle of a project. Updating is a sticky issue. If the system is working fine…purring like a kitten, then why update? Updating can (as you found out) just lead to problems. The only time I’d recommend updating is when it is needed…such as going from 10.2.8 to 10.3.9 when you update your editing software from FCP 4.1.1 to FCP HD…since FCP HD only works with 10.3.
Now…off my soapbox. Try zapping the PRAM…restart and while the computer is starting, hold down the OPT-APPLE-P-R keys until you hear the computer’s startup tone 4 times. Then let go. Then use the Disk Utility to Repair Permissions. If none of this works, it might be time for a reinstall of FCP.