Comment 12 for bug 105390

Just so you know, shirish, the "DISPLAY=:0" is a guess, and is only likely to work if that user is the first one to have logged into a graphical desktop. You can get the actual value by looking at your current .xsession-errors, the line that says:

/etc/gdm/PreSession/Default: running: /usr/X11R6/bin/sessreg -a -w /var/log/wtmp
 -u /var/run/utmp -x "/var/lib/gdm/:0.Xservers" -h "" -l ":0" "shirish"

If it says something other than ":0" there, use that instead.

The fact that you have a test user working fine, strongly suggests that something is wrong with your configuration. I know seb128 had you move your .gnome2/session out of the way, and you were still having problems... you might try moving your whole .gnome2 out of the way (which will remove your configuration in many programs). If that doesn't work, you might need to move your important things away, destroy the shirish user, and recreate a new account for shirish (since the test account was working).