Comment 23 for bug 396459

Thank you Nikola for your effort with determining why "Don't ask for password on login" was greyed out. I tried your solution of creating the "nopasswdlogin" group and it did indeed allow that option to be selected. However, upon restarting, the users that I selected still had to enter their password at the GM login screen.

I eventually found a different resolution at ubuntu forums http://ubuntuforums.org/showthread.php?t=12777&page=2. The thread is very old but the solution still works with Karmic. The only difference is to change the location of /etc/X11/gdm/nopassusers.txt to /etc/gdm/nopassusers.txt