A co-worker has reminded me that the 'x' in the passwd file is how the
shadow suite annotates that the password should be stored in the shadow
file:

       password field is blank. If the password field is a
       lower-case “x”, then the encrypted password is actually
       stored in the shadow(5) file instead; there must be a
       corresponding line in the /etc/shadow file, or else the user
       account is invalid. If the password field is any other

(from passwd(5))

Once the 'x' was removed, that was the indicator that the password
should be stored in the passwd file instead of the shadow file.

So this is behaving as expected.

Thanks

** Changed in: base-passwd (Ubuntu)
       Status: New => Invalid

** Information type changed from Private Security to Public Security

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https://bugs.launchpad.net/bugs/1584945

Title:
  after reset password in /etc/passwd and set a new one, hash appears in
  /etc/passwd

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