Comment 14 for bug 117736

This is perhaps a problem with Debian's pam policy.

Running a Fedora9 KVM, the following /etc/pam.d/system-auth works for me (+++ denotes "added" to stock config):

#%PAM-1.0
# This file is auto-generated.
# User changes will be destroyed the next time authconfig is run.
auth required pam_env.so
+++auth required pam_mount.so try_first_pass
auth sufficient pam_unix.so nullok try_first_pass
auth requisite pam_succeed_if.so uid >= 500 quiet
auth required pam_deny.so

account required pam_unix.so
account sufficient pam_localuser.so
account sufficient pam_succeed_if.so uid < 500 quiet
account required pam_permit.so

password requisite pam_cracklib.so try_first_pass retry=3
password sufficient pam_unix.so sha512 shadow nullok try_first_pass use_authtok
password required pam_deny.so

session optional pam_keyinit.so revoke
session required pam_limits.so
session [success=1 default=ignore] pam_succeed_if.so service in crond quiet use_uid
session required pam_unix.so
+++session optional pam_mount.so try_first_pass