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Description of problem: I am guessing this is happening because I am using lxc and kvm at the same time.
I'm having the opposite problem (on Fedora 16) - i.e. it doesn't ask me for a password at all. It then hangs "Connecting" with no error messages or time outs. Before I upgraded to F16 from F15 it all worked perfectly.
Peter, that's a separate issue, please file a separate bug. Duping this to another bug tracking the proper fix *** This bug has been marked as a duplicate of bug 749750 ***
My problem has gone away (with normal system updates) so I won't raise a bug.