System failed to reboot and stuck at gray screen

I have an early 2011 MBP that came with Snow Leopard. I have now upgraded it to Yosemite. Yesterday, when I tried restarting the computer it did not recover from gray screen (kernel panic?). I tried the SMC reset, PRAM reset. Safe reboot does not work. I went into the recovery mode and tried to do disk repair. I get an error message which states that the disk cannot be unmount. When I try reinstalling OS X (through Internet) I get an error saying OS X failed to download. Any suggestions?