With shadowing turned off, setting a zero-length password seems to corrupt the password data-base. Whether I do it by editing /etc/passwd, or using passwd as root, the user is unable to log on. Furthermore, even if root runs passwd again to set a non-null password, that user remains hosed.
I cannot reproduce this. Are you using NIS or some other form of authentication besides /etc/passwd? A non-root user cannot set a null password with the passwd command; perhaps the old password is still in force for you?
OK, 3029 does look like the same report...
The bug really does exist. I'm not sure why I couldn't recreate it on my machine, but plenty of people have reported it. In any case, it is clearly a duplicate of 3029. Thanks for your patience... *** This bug has been marked as a duplicate of 3029 ***