Could you try if that's still an issue using the new gdm in karmic or
lucid now?
** Changed in: gdm (Ubuntu)
Status: Triaged => Incomplete
** Changed in: gdm (Ubuntu)
Assignee: Ubuntu Desktop Bugs (desktop-bugs) => (unassigned)
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gdm doesn't take care of pam_umask settings.
https://bugs.launchpad.net/bugs/25910
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