These issues began to happen immediately after I updated to the latest Vanilla kernel, 2.6.18-2835 AND to a recently compiled custom kernel which is identical to the vanilla one.
1) It begins when I first install the 9629 driver, and then shutdown. Upon a cold start, that's when the X-server boots into init 3 mode, instead of initiating an X-server startup.
2) The only workaround is when it boots into command line mode, I type "init 3; init 5" then the X-server exhibits the NVIDIA splashscreen, and all is well after that.
3) I've managed to edit and re-edit Xorg.conf to no avail. Even so much as to re-install the driver. But no matter what I do, the X-server will NOT perform a clean boot up on a cold start. Hopefully, this nagging issue can be solved
Edit: The KMOD NVIDIA solution from Livna works fine. I may have to revert to the stock kernel and re-install the KMOD drivers again if there is no solution to these issues.