[ubuntu] Ubuntu does not boot without "nomodeset" in grub

I was having a working 12.04 64bit system. However suddenly after couple of abnormal shut down of system. I am not able to boot normally.
Machine boots but there is default purple/black screen. No textbox or login buttons.
After editing the grub and making "nomodeset", machine boots.
However I can see an "AMD Testing use only. Unsupported Hardware" watermark at right bottom corner of screen.
I have not activated "ATI/AMD proprietary FGLRX graphics drivers"

Following some forums, I tried to edit grub and make it nomodeset and then tried update-grub but it fails.
I keep getting "/usr/sbin/grub-mkconfig: 36: /etc/default/grub: Syntax error: EOF in backquote substitution" error message.

Also tried to use Boot Repair but still not able to fix it.
http://paste.ubuntu.com/6594930/

Attaching the grub file for reference (grub.txt).

Attached Files

• grub.txt (1.2 KB)