Hi,

I've got the same problem. I've changed my user password with the passwd
command. I have an encrypted home folder and got the same error message
when I tried to log in. The only solution i found was to get back to my
old password.

Please, let me know if you found a better way to fix it without keeping
the old password.

Thanks

-- 
9.10 karmic gdm login fails after changing password (users-admin) when home 
folder encrypted (ecryptfs)
https://bugs.launchpad.net/bugs/470129
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