I had this problem after the November update. Running 9.10, i386, 32
bit, nvidia video card. It occurred because I run the monitor at less
than full resolution. I did not have this issue originally on 9.10. The
only workaround I found was to use the full resolution of my monitor,
which I did not want to do. I removed gdm and loaded wdm, which allows
me to change the screen resolution without a login loop.

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Karmic gdm loops back to login after login 
https://bugs.launchpad.net/bugs/454437
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