I have tracked this down to the following pam rule being buggy on gdm
auth [success=1 default=ignore] pam_unix.so nullok_secure
Not quite worked out where the bug is, but nullok_secure is an Ubuntu
specific argument and fails on gdm, and possibly other !lightdm display
managers also.
** Also affects: pam (Ubuntu)
Importance: Undecided
Status: New
** Changed in: pam (Ubuntu)
Status: New => Triaged
** Changed in: pam (Ubuntu)
Importance: Undecided => Critical
** Changed in: ubuntu-gnome
Importance: High => Critical
** Changed in: gdm3 (Ubuntu)
Importance: High => Critical
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https://bugs.launchpad.net/bugs/1561302
Title:
gdm won't allow passwordless login
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