Exactly the same problem.
Ubuntu server with GUI on top. Worked perfectly with Natty. Failed on upgrade 
to Ocelot. Had problem with 'waiting for network configuration', which I solved 
using well documented patch.
I have installed gnome as well as Unity (after problem arose) and login as 
administrator just loops back to login screen. Choosing recovery console or 
gnome makes no difference. Other users login no problem, but have few 
privileges.
Can login to command prompt as admin no problem.
Don't know if it's relevant, but sometimes it flashes nvidia logo briefly 
before looping back to login.

Dr Dik Allison

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https://bugs.launchpad.net/bugs/875542

Title:
  Can't login as administrator, only as Guest. Once correct password is
  typed using Administrator as user, screen goes black and then returns
  to login.  As Guest I cannot access external drives, etc.  Also cannot
  shutdown.

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