This is not a security vulnerability as the file you are using is an example 
and not intended for production use. It says right in the profile 
/etc/auth-client-config/profile.d/acc-default:
# 
# this example is for using kerberos to authenticate. Has been used with
# nss-updatedb, libpam-krb5 and libpam-ccreds. Sould also work with
# libpam-heimdal. This is only an example, and you may have to create
# your own profiles to authenticate with your system.
#
[kerberos_example]
...

I will verify that the example works as intended.

** This bug is no longer flagged as a security vulnerability

** Changed in: auth-client-config (Ubuntu)
   Importance: Undecided => Low

-- 
Password is ignored on local login, even for root
https://bugs.launchpad.net/bugs/526999
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