ssh "Permission denied" on everything

[Richard Pickett]

We did a new install of fc4 then yum update and have hit an interesting
problem

We `useradd test` on the new machine, then go to another machine and ssh
test at new_machine. It logs in and gives:

-bash: /etc/profile: Permission denied
-bash-3.00$

then no matter what commands I try to execute they always come up with
"Permission denied". When we log in as root on the box the commands we
are trying to execute show that they are rwxr-xr-x, so we should have
permissions to run the command from any user account, but it just
doesn't work.

We've done this exact setup using FC3 on a number of other machines
without any problems.

Any ideas?