To those reading this with the same issues, I finally got the 1.8 driver working by following the instructions on this knowledge base article and fixing the file permissions using the Disk Utility. Afterwards the driver works fine, Finder opens, flash works, login screen displays correctly. No probs what so ever so far.

To Displaylink, your customer service sucks. Either your forum support are not even aware what's on your site or you have clamped up to remove yourself from any liability of screwing up so many peoples system. Not the way a successful company operates either way. You could have at least posted a link to the fix.

^ That didn't work
 

That didn't work for me. I tried every possible way I could think of. We need a new driver.

The fixing of the permissions only seems to work for each time the system starts. I was having to fix the permissions each morning before I started the computer. That's really not much of a fix.

Wow. Over a month with this problem and not ONE word from DisplayLink. What I find amazing is that the dev version of 10.8.1 has been in the works for several months as well. Apple is getting ready to release 10.8.2 for developers already. How is DisplayLink going to support their product if they already can't resolve this issue now?

I have been forced to backup and reload and use a copy of OSX Lion. This is a HUGE pain as I have had to remove the HD and use another one as to preserve my system until DisplayLink fixes the bugs.

The idea of this product is great. When they work they are really a genius idea. It takes your machine to a new level without much investment. However, I have now returned 2 14" Lenovo external displays as well as my Macbook Air that I used them with. I must say I am extremely disappointed with DisplayLink and I think EVERYONE with this problem should keep posting.

DisplayLink DESERVES as much negative press over this as possible. It may help them decide to release products with properly tested drivers, ect. As I said in another post... It is one thing if it just doesn't work. However, this is rendering my systems unusable and I have been forced to change my OS to Lion, and I am not able to keep my main dev machine updated properly (which is a big problem for someone trying to use the latest tools to build iOS apps, ect).

I was reading another thread, one which DisplayLink is paying attention. From what I understand, the problem lies in the generic ktext that DisplayLink uses to create their display driver for OSX. I don't know specifically what the issue is, but apparently the issue belongs to Apple. The issue is supposed to be fixed in the 10.8.3 update, and I can verify this is true because I installed the 10.8.3 beta update, and my DisplayLink adapter works like a champ again! I would hope that Apple would apologize for any negative feedback that affected display manufacturers have received while their OS has had display driver issues.

But J5Create has come up with a driver that works with 10.8.2 and lower, so obviously it's possible to work around this bug. As a result, even if the bug was caused by Apple, the fact that it's possible to work around it tells me that Displaylink needs some better customer service.