adduser --encrypt-home fails if umask is 077

[Ronan Mooney]

Binary package hint: adduser

To recreate:

Set umask to 077 in /etc/profiles
(You may have to remove /home/.ecryptfs to reproduce this)

Run:
adduser --encrypt-home user

Expected behaviour:
User is created with encrypted home directory that mounts automatically at login.

Actual Beheviour:
It does not work as expected. When you are asked to set the users password, it says:

passwd: permission denied

After this (if you let the adduser script run through) when the user logs in they cannot view their home directory

I *think* adduser script is creating .ecryptfs for the first time as root, with 700 permissions,. and trying to write to it as a user.