It seems like lightdm demands -keeptty option. The attached ightdm.conf
works for me now in an updated 11.10 machine.


** Attachment added: "Working configuration file"
   
https://bugs.launchpad.net/ubuntu/+source/lightdm/+bug/893590/+attachment/2633700/+files/lightdm.conf

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https://bugs.launchpad.net/bugs/893590

Title:
  Control-C causes LightDM to restart in a Multiseat configuration

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