Did you try checking out the logs under /var/log/kdm or the likes? It should give you a clue as to why its not allowing regular existing users to login. It'll mostly be something to do with permissions, though I am not sure.
Also, check out your config files for KDM under /home/aniket or whatever your home directory is called.
One idea is to check out the config files generated for the new user and compare them against the ones in your existing account. That should reliably help you to determine what config parameters are causing this odd behavior :) ( use diff to compare the files :P )
One question, how did you upgrade these packages? Yum? Pup? what?
-- Regards, Dinesh A. Joshi
I updated using synaptic.
Actually I got the problem sorted later. It seems my kid brother had played around with group and membership settings I saw following in log
kdm: :0[3833]: saving groups failed: Invalid argument kdm: :0[3833]: Client start failed kdm: :0[3833]: restoring groups failed: Invalid argument
Then I just casually checked in users and groups configuration and found the problem. Thanks a lot for the help ..coz in the process I cleaned up my home dir which i was putting off for some reason or other!