Change the line to read 

x:5:respawn:/usr/bin/gdm -nodaemon

prefdm sucks, and has problems.  Remember to make a backup of your
inittab file so you can remember how that line read initially just in
case you want to go back and fix prefdm somehow.  You're better off
doing the above.

Good luck.

(I really need a linux machine at work)

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