Help with login problem!

[FS]

Hello all,

I set up a new FC1 machine yesterday and created a user "newuser"
using "adduser newuser" and changed its password.

When I try to ssh to the said account, it doesn't work. The connection
opens, accepts my password and then closes instantly. Trying to "su -
newuser" or "su newuser" result in a "could not open session"
Interestingly enough, FTP does work!

Googling seems to point to permissions problem but I can't figure out
where or what. The /etc/passwd is 644, /etc/group is 644 and
/etc/shadow is 600

Any help/tips appreciated!

More relevant information:

root at c7504s98 ~$ uname -a
Linux c7504s98.testcompany.com 2.4.22-1.2115.nptl #1 Wed Oct 29
15:42:51 EST 2003 i686 i686 i386 GNU/Linux

SSHD version is "sshd version OpenSSH_3.6.1p2"

My /var/log/messages show these related messages:

Apr 28 17:06:36 c7504s98 su(pam_unix)[4383]: session opened for user
newuser by root(uid=0)
Apr 28 17:06:36 c7504s98 su[4383]: pam_xauth: error determining
invoking user's name
Apr 28 17:07:31 c7504s98 su(pam_unix)[4776]: session opened for user
newuser by root(uid=0)
Apr 28 17:07:31 c7504s98 su[4776]: pam_xauth: error determining
invoking user's name
Apr 28 17:16:34 c7504s98 su(pam_unix)[4820]: session opened for user
newuser by root(uid=0)
Apr 28 17:16:34 c7504s98 su[4820]: pam_xauth: error determining
invoking user's name

The /var/log/secure file shows the following:

Apr 27 15:53:05 c7504s98 sshd[1860]: Accepted password for newuser
from 127.0.0.1 port 32775 ssh2
Apr 27 15:53:05 c7504s98 sshd[1862]: fatal: login_get_lastlog: Cannot
find account for uid 500

Thanks!
Faisal