I talked to the hosting company. They told me I have to change the links from relative to absolute after logging in. I tried to explain that I cannot log in whatsoever, so they told me to do it manually on the ftp server. Sounds totally weird and wrong to me.
I connected via ftp. All the files are there and as far as I can tell, everything looks like it did a week ago (back when everything was still working) (the theme index.php is there as well. I am using atahualpa). Also I realized that I had a backup tool running for the data base. It is called dbc-backup. I tried downloading the last backup. It gave me a .sql.gz file. When unpacking it using various clients on mac os 10.6 I only got a file is corrupt message. I have absolutely no idea what I should do next. Please help!