>And the summary so far (please correct any points):
>* user x has uid y with home directory /home/x
Yes.
>* /home is a directory on / not a mount
Yes
>* /home/x has uid y with permissions 7?? and /home has permissions 755
>  and neither have extended permissions (chflags(1))
Yes
>* you've tried user x with /bin/sh , /bin/csh & /bin/ksh and other shells
>  to make sure it isn't one of the shells startup files whinging
Yes
>* from root you've tried ``su -m x /bin/sh'' (and shell variants) and they
>  all fail (this is a variant of the above point)

Well, they all fail but for a different reason: su gives "Illegal 
variable name." as the reason.

>* when the error occurs the shell fails

Not sure that the shell fails, but su or login fails and it won't drop 
into the shell apparently at all. In fact, from the kdump of su I never 
saw a shell invoked.

>What else?
>* you're using NetBSD 1.796 mega system with ultra speed logons?  Hmm, just
>  what version was it again?

It's stock NetBSD 1.3.3 with a GENERIC kernel. 

Thanks for the help...

-- Josh Hope