ah okay your using ubuntu, forget the /mnt/sysimage then.
Your drives are mounted as read-only when you go into rescue mode so you must re-mount them as read/write using
mount -rw -o remount
that will remount / as read/write. if you /etc is on a seperate partition you must remount that aswell.
The command
pwconv
will rebuild your shadow file from the passwd file, then change your root password using the
passwd
command.
Its worth check /var/backup as you may have passwd and shadow file backups in there. they will have the .bak extention on them, eg shadow.bak...
when you boot the system normally what error are you getting ?