I found another workaround to this.

When the password prompt comes up, press OKAY (leaving it blank), it
will then give an error that the password is blank and you will now be
able to fill in the boxes. At this point the password MUST be different
than the original. Occassionally, I have found while typing in the new
password a second time, my laptop will lock up, but a hard reboot will
allow you to try again and proceed to logging in.

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https://bugs.launchpad.net/bugs/641712

Title:
  Not possible to enter password for a new user in KDM (Maverick)

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