I too have problems running gdmsetup. When I run it, there is constant disk activity, but no gdmsetup shows up. Killing gdmsetup does not seem to stop the disk activity. Only rebooting does.
The hard disk activity sounds so intense that I didn't dare wait 5 minutes or whatever for gdmsetup to show up.
In my case, running gdmsetup from the terminal does not produce *any* error messages.