mounting udev on /dev failed: No such device

Question

I am trying to compile Linux kernel 3.2.36 with its source code on the x86_64 architecture. I followed the following set of commands under my Linux source distribution directory:

make defconfig  
make -j8
make install
make modules_install
update-initramfs -c -k 3.2.36 
update-grub

I have updated my grub.cfg file to load another Linux pointing to the new initrd3.2.36.img file.

Now when I restart my machine, I went to boot options and loaded the compiled kernel 3.2.36. It boots successfully and stops and a prompt with,

<initramfs>

Few lines above that I am getting following messages,

mount: mounting udev on /dev failed: No such device
w: devtmpfs not available falling back to tmpfs for /dev
BusyBox v 1.185

I just entered ls, I am able to find very limited set of commands.

I am not able to find useful help from Google.

My grub.cfg content

export linux_gfx_mode
if [ "${linux_gfx_mode}" != "text" ]; then load_video; fi
menuentry 'Ubuntu, with Linux 3.2.36' --class ubuntu --class gnu-linux --class gnu --class os {
        recordfail
        gfxmode $linux_gfx_mode
        insmod gzio
        insmod part_msdos
        insmod ext2
        set root='(hd0,msdos1)'
        search --no-floppy --fs-uuid --set=root 40ac3762-2ffb-4aec-9e5d-f782f2b50b7e
        linux   /boot/vmlinuz-3.2.36 root=UUID=40ac3762-2ffb-4aec-9e5d-f782f2b50b7e ro   quiet splash $vt_handoff
        initrd  /boot/initrd.img-3.2.36
}
menuentry 'Ubuntu, with Linux 3.2.36 (recovery mode)' --class ubuntu --class gnu-linux --class gnu --class os {
        recordfail
        insmod gzio
        insmod part_msdos
        insmod ext2
        set root='(hd0,msdos1)'
        search --no-floppy --fs-uuid --set=root 40ac3762-2ffb-4aec-9e5d-f782f2b50b7e
        echo    'Loading Linux 3.2.36 ...'
        linux   /boot/vmlinuz-3.2.36 root=UUID=40ac3762-2ffb-4aec-9e5d-f782f2b50b7e ro recovery nomodeset 
        echo    'Loading initial ramdisk ...'
        initrd  /boot/initrd.img-3.2.36
}
submenu "Previous Linux versions" {
menuentry 'Ubuntu, with Linux 3.2.0-35-generic' --class ubuntu --class gnu-linux --class gnu --class os {
        recordfail
        gfxmode $linux_gfx_mode
        insmod gzio
        insmod part_msdos
        insmod ext2
        set root='(hd0,msdos1)'
        search --no-floppy --fs-uuid --set=root 40ac3762-2ffb-4aec-9e5d-f782f2b50b7e
        linux   /boot/vmlinuz-3.2.0-35-generic root=UUID=40ac3762-2ffb-4aec-9e5d-f782f2b50b7e ro   quiet splash $vt_handoff
        initrd  /boot/initrd.img-3.2.0-35-generic
}
menuentry 'Ubuntu, with Linux 3.2.0-35-generic (recovery mode)' --class ubuntu --class gnu-linux --class gnu --class os {
        recordfail
        insmod gzio
        insmod part_msdos
        insmod ext2
        set root='(hd0,msdos1)'
        search --no-floppy --fs-uuid --set=root 40ac3762-2ffb-4aec-9e5d-f782f2b50b7e
        echo    'Loading Linux 3.2.0-35-generic ...'
        linux   /boot/vmlinuz-3.2.0-35-generic root=UUID=40ac3762-2ffb-4aec-9e5d-f782f2b50b7e ro recovery nomodeset 
        echo    'Loading initial ramdisk ...'
        initrd  /boot/initrd.img-3.2.0-35-generic
}
}

Can someone help me on how to obtain a Linux shell and add user authentication to my compiled Kernel?

I am ready to read any materials or books even, please suggest me.