I bumped into this as well, with lightdm and gdm after a release upgrade from 
11.04. 
The proposed solution to remove, ~/.Xauthority and ~/.ICEauthority doesn't work 
for me.
I still don't have the solution of what triggers this but I suggest to fiddle 
with .profile, excluding some lines make the issue apparently go away. (However 
I can't afford to comment out addsshagent or virtualenwrapper in my setup)
I notice a weird thing: even declaring a simple function in my .profile 
triggers the problem ie:
damn() { export foo="boo" }
damn

this cause the gdm/lightdm not to login as described here. Does this
make any sense to you? Do you experience the same?

With kdm (no matters if I go to kde or gnome) my usual .profile expose
no problems and I can enter but I have another possibly related issue it
fails to gracefully terminate the session the screen remains still with
just the background and the mouse pointer (still working) with no
activity!

On three stupid login programs I can't even use one. 
if you have ideas please suggest, I don't think I have a very special setup but 
I'll post info if required

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https://bugs.launchpad.net/bugs/871667

Title:
  .Xauthority sometimes owned by root, which blocks login

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