Hi there!
I can confirm this problem, too. Apparently this is caused by problems in 
parsing the /etc/gshadow information. It is fixed in Debian, see their bug 
report:
http://bugs.debian.org/cgi-bin/bugreport.cgi?bug=569899
(Jerzy: this is why a password in /etc/group -- bad idea :-) -- works).

Please fix and keep the good work up!
Thank you!
Robert

** Bug watch added: Debian Bug tracker #569899
   http://bugs.debian.org/cgi-bin/bugreport.cgi?bug=569899

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https://bugs.launchpad.net/bugs/600377

Title:
  newgrp password enabled group doesn't work

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