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Release found:
Red Hat Enterprise Linux 4
Red Hat Enterprise Linux 5
Solution:
The service pam_mkhomedir relies on the program doing the authentication (su, or login for example), to have enough permissions to create the home directories. This is not the case, as most authentication applications drops the permissions to avoid security problems.
To create home directories on-the-fly, use pam_oddjob_mkhomedir instead. In this case, the directory creation will be handled by a D-Bus service running as root instead.
To put it in place follow the steps below:up2date -i oddjob
#service messagebus restart
#service oddjobd restart
#chkconfig oddjobd on
session required pam_oddjob_mkhomedir.so
skel=/etc/skel/ umask=0022
Now to test if it is working, try to log in as a user that does not have a home directory.