I had the same issue last night. (in fact I was refreshing this thread hoping for a response).
I ended up sorting things out by using the CWM removal tool found here:
http://www.etoile-laconnex.com/CWR-removal-rootsafe.zip (credit does not go to me, but I am not sure who made it)
Put it on the SD card and run it like you did the kernel upgrade. Reboot and CWM will be gone and you should boot normally (although it took a few extra minutes for me to boot).
Apparently it happens due to a combination of 1.1 + autonooter + user error. Rebooting the nook after flashing CWM seems to be the important step that when missed causes this issue.
I don't know if this forum has a policy regarding linking to competing forums, but here is the thread at androidtablets that helped me solve the problem:
(How To) Installing/Using ClockworkMod, Rom manager, nandroid backup, custom kernels