Yeah, try with a debugging kernel first. NITdroid doesn't use the /linuxrc script in the initfs partition.

Now, this is how NITdroid boots:

1. NOLO does its init thing and finally loads and uncompress the flashed kernel to RAM.
2. Control is passed by NOLO to the kernel loaded in RAM.
3. If that flashed kernel is NITdroid it contains an embedded RAM filesystem (initramfs) which is / (root dir) all the time mimicking other Android devices.
4. Kernel pass control to /init in the ramfs.
5. /init loads instructions from /init.rc and /init.nokia.rc.
6. /init.rc tells init to mounts /dev/block/mmcblk0p3 (ext3) under /nitdroid.
7. /init.nokia.rc tells init to run nitboot which loads and run the Nokia proprietary stuff that lives in NITdroid under /nokia.
8. /init launches all remaining Android stuff.

Visually:

1. Initial white Nokia screen is loaded by NOLO.
2. First NITdroid screen (static image) is loaded by /init when run.
3. Screen dims when DSME proprietary daemon is loaded by nitboot.
4. Second NITdroid screen (animated) is loaded by the "remaining Android stuff" when loading.
5. Finally the Android GUI is loaded.

Differences for the debugging kernel:

1. Kernel and console output are directed to screen and serial.
2. ADB daemon is always loaded early in the init sequence.
3. First NITdroid screen (static) is not loaded to maximize console output.
4. Second NITdroid screen (animated) is not loaded but screen turns black until the GUI loads or an error is shown.

You should tell your visual sequence and better if you can connect with ADB and get a 'logcat' so we can determine where is the problem...