So last update on RaspBMC and the new Browser App broke EVERYTHING.
Came to an „Kernel Panic“ screen in the morning.

Experimenting with several COMPLETELY USELESS solutions I finally found one that worked.
So here is what you have to do:

1) Take the SD card out and put it in a different computer. Linux/Win doesn’t matter.
2) Open config.txt in a text editor. As you see, there are several entries saying something with „browser“. Delete everything so that the only content in there is this:

start_file=start_x.elf
fixup_file=fixup_x.dat

3) Save and put the SD card back in the RasPI. Boot
3b) Optional: delete every file on the SD card with „browser“ in the filename. I did this because I was pissed off. Did not break anything and since I’m not interested in this „feature“ I didn’t care.

Usually, you should be good at this point. RasPI will boot and update (Stay cool. Can take a while. If you need details, push ESC when it gives you the option).
When you’re back in RaspBMC go to Programs / Raspbmc Settings and press OK. You’ll need to reboot afterwards. If you experience any problems booting up, check the contents of the config.txt on the SD Card again.
Mine looks like this:

arm_freq=800
gpu_mem=128
disable_overscan=1
force_turbo=1
start_file=start_x.elf
fixup_file=fixup_x.dat
hdmi_force_hotplug=1
hdmi_drive=2

Unfortunately I did not get into RaspBMC after step 3. In my case I got this:

Free initramfs and switch to another root fs:
chroot to NEW_ROOT, delete all in /, move NEW_ROOT to /,
execute NEW_INIT. PID must be 1. NEW_ROOT must be a mountpoint.

This sounded like most of the useless solutions to me. It looked extreme. Something I did not want to do.
It turned out that I had to put the USB drive I was using to the upper port while the keyboard dongle had to go on the lower port.

So booting up I realized that the keyboard didn’t work. RasPI was also not reachable through SSH. At least not through the local IP. It worked great through the WAN IP so I could at least run some commands.
So after even more googling I found a simple solution:

sudo rm /scripts/upd_hist/kver
sudo reboot

After the reboot bot the USB and SSH worked again.

Special thanks go to miappa from stm labs!

P.S. There are HORRIBLE solutions for Linux related problems out there. If you ever come by some people telling you that your hardware is broken or that you have to execute some xx-lines script to solve a problem: LOOK AGAIN, GOOGLE MORE! Most of the times, the solution is easy and does not require you to rebuild everything or buy new hardware…