I have 2 redhat 6.0 boxes running NIS and having local accounts. Local accounts except root (2 login-able accounts) don't work anymore, i.e. I can't login using their username/passwd combination via (virtual) console or remotely. I can log in as root from console or login as an NIS user. I can edit /etc/passwd and add new local users that way, create/chown their dirs, but when I `passwd newuser` as root I type in the passwd twice and get the result that all auth token have been updated successfully, while /etc/passwd still shows an unchanged passwd field. No shadow passwds. I can `/bin/su localuser` from root and stuff works, but that is less than ideal. /etc/nsswitch tells it to looks at (local) files before nis. The only pointer I have is the /var/log/messages line that says that the pwdb structure is no longer valid. And when I try to `passwd` from a local user account (into which I've su'ed from root) I get "Auth service cannot retrieve auth info".
Are you sure this is not a problem of having shared UIDs between NIS and the local system? Also, you might not want to edit the local /etc/passwd by hand - use useradd instead. There is a bug in passwd that will refuse to set the passwords for accounts with an empty password field.