I'm not sure what specifically causes it, but the situation in the
original post is true. In addition, when this does happen, generally I
no longer have sound in the X session I'm trying to use, which makes
this bug a little more important I think. I've been able to work around
the issue by either restarting the X server, logging out one of the
users, or pressing ctrl+alt+F10 which brings me to the login screen and
for some reason stops it from looping (it displays the message saying
that an invalid login occured once.) These aren't really acceptable
workarounds though.

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In multi account environment, gdm starts looping , making failed login noises;  
pam_unix(gdm:auth)
https://bugs.launchpad.net/bugs/261661
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