Comment 24 for bug 478274

I apologise for not opening a new bug, but I think my observations of a clean karmic install would be helpful because I had the same symptoms - both usb memory stick and greyed-out admin-users authenticate. Following this particular bug helped me because I found a different entry in /var/log/daemon.log:

gdm-binary: WARNING: Unable to load file '/etc/gdm/custom.conf': no such file or directory

Sure enough, the file hadn't been created during my (clean partition, remember?) installation. I found the default file on another karmic system that I'd recently upgraded from jaunty - the file contains a load of comments and 8 empty clauses. I copied this file to my defective system, rebooted and now everything runs fine!