When I enter my credentials and enter a new password, Ubuntu gives me no errors however. When I log out to log back in, there is no prompt for entering a password on the log on screen. I am just able to enter without entering any passwords. I have tried setting the password in the Terminal both "sudo passwd" and regular "passwd",but still no log in password is needed on the login screen.
This a system setting. Go to Systems Settings -> Security & Privacy. Under this you can see a button saying "Password Settings". When you click on the button you can see all the user list and their respective details. Select your account and click on Automatic Login - OFF. This prompts an option to enter your password every time you logout.