kernel hang at Starting Kernel... compiling using default config

Your problem probably arises from toolchains incompatibility. You are using a toolchain different from the one used for compiling all the rest of the distribution you are updating the kernel to.

If you are using Angstrom, U-boot was compiled with one of official Angstrom toolchain while your kernel was compiled against the toolchain provided by codesourcery.

Pls consider to switch to an official Angstrom toolchain, http://www.angstrom-distribution.org/toolchains/

Best Regards

1) Beagleboard is supported from 2.6.29
2) wifi works from 2.6.37 and I would use that kernel at your place
3) you can use both CodeSOurcery and Angstrom toolchain. No difference
from the compilation results point of view