I upgraded again from 9.10 to 10.4.1 yesterday, since I coudn't see the bug on 
my notebook a week before.
But it is still there!
I changed orientation to the bottom on the shell in 
~/.gconf/apps/panel/toplevels/panel_0/%gconf.xml and could log in again. After 
putting it back to the top, login was broken again. After adding a new panel to 
the top and moving the applets to it, then removing the old panel, alle works 
ok and I can login again with two panels at the top.
Unfortunately I have only be able to reproduce this bug once on a seperate demo 
account: I switched bottom panel to the top. All worked great. Next I switched 
to human skin and no desktop effects.  Then I was not able to login at the demo 
account! As said, unfortunately I have only been able to reproduce this once, 
yesterday.
If anyone is seriously interested in debugging this issue, I can send him my 
"buggy" .gconf directory from a backup of mine.

-- 
If both top and bottom panels are set to "top" then post upgrade to lucid 
gnome-panel hangs
https://bugs.launchpad.net/bugs/589899
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