I just used Unetbootin to create a persistent Xubuntu 11.10 install on a USB drive (FAT32). This worked fine the first time, but then required a password. I tried these combinations of logins and passwords:
ubuntu -
ubuntu ubuntu
xubuntu -
xubuntu xubuntu
root -
root root
root pass
root password
None worked. I reinstalled. Same thing. I mounted the casper file system:
mkdir /media/casper
mount /media/KITE/casper-rw /media/casper -o loop
And edited (/media/casper)/etc/passwd to delete the 'x' in the root line. Login fails, and the 'x' miraculously found its way back into the passwd line..

Has anyone come across this, or similar, or have any ideas about how to resolve it?