I have the same problem. I upgraded from 10.04 to 11.10. Everything went fine until the first logon screen. I chose the correct user, typed in correct password and it seems like logging in, but it got back to login screen (eventhough the password was correct) - it was like neverending loop, typed password and got back on login screen.
A little workaround is to launch a console e.g. ctrl+alt+F2, login as a normal user (it works for me) and then type sudo /etc/init.d/gdm start or service gdm start (and provide the root password). Afterwards the graphical ubuntu appears (Gnome) and everything seems to be working until I wanted to shutdown or restart the computer. When I hit the restart or shutdown button it only logged me off, but it did not shutdown the computer.
So I used the command sudo shutdown -h now to shut it down. After the reboot of my computer, the problem stays the same.
It might be some problem of gdm not starting properly? Anyone know?
K.