Add new user as follows, where a password is typed in where it says 

Enter new UNIX password: 
and
Retype new UNIX password: 

and where ENTER is pressed after the other lines requesting my input

jer...@home2006:~$ sudo adduser test3
Adding user `test3' ...
Adding new group `test3' (1004) ...
Adding new user `test3' (1004) with group `test3' ...
Creating home directory `/home/test3' ...
Copying files from `/etc/skel' ...
Enter new UNIX password: 
Retype new UNIX password: 
passwd: password updated successfully
Changing the user information for test3
Enter the new value, or press ENTER for the default
        Full Name []: 
        Room Number []: 
        Work Phone []: 
        Home Phone []: 
        Other []: 
Is the information correct? [Y/n] 

Then either click on the icon at the top right, then click on test3, OR
restart the computer

A list of users is presented.  Click on test3.
A window comes up asking for a password.  Enter the same password given 
previously.
Click on Log In button.
Then the login window disappears and the pink / purple screen, with nothing on 
it except the mouse pointer, appears.  Clicking the mouse has no effect.  

One thing that I discovered has an effect is to press the power switch.
This produces a window giving a choice of Shutdown, Restart or
Hibernate.

The same happens with users added using the menu item Users and Groups -
but if necessary, just look at the method I used above - it was easier
to provide complete details for that.

The behaviour I expected is for a banner (panel?) to appear along the
top of the screen, containing menu items, and along the bottom of the
screen containing an entry for each window I start up, when I do.  And I
expect that clicking mouse buttons will have some effect.  But I can't
recall exactly what happened the first time I logged in myself.
Certainly not a totally unresponsive screen.

Happy to provide specific answers to any further specific questions you
may have.  I don't know exactly what further information is relevant.

-- 
new users can't log in
https://bugs.launchpad.net/bugs/593231
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