Originally Posted by KenKnight
Check that the user account has a valid login shell in /etc/passwd. Post the corresponding entry here if you are unsure. Don't worry, /etc/passwd rarely contains any secret info these days.
After you've su'd to the user, what is the result of typing
Have you confirmed that the dir is really being created by root? I mean did you do
after creating the dir?
I ask because I've seen an instance where a user gets a "#" prompt (forget exactly why, but it was related to problem with home dir file permissions), which gives the illusion of 'root', but isn't.
Could you post the actual log entries from auth.log?