I can confirm that autologin failure in Xubuntu 12.04.3 (32bit or 64bit)
is due to home directory encryption. If you DO NOT encrypt your home
directory on installation and your /etc/lightdm/lightdm.conf looks like
the following, autologin WILL work. You DO NOT have to do anything else,
such as the disabling of asking for a password on login in System >
Users and Groups.

[SeatDefaults]
autologin-user=yourusernamehere
autologin-user-timeout=0
user-session=xubuntu
greeter-session=lightdm-gtk-greeter
allow-guest=false

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https://bugs.launchpad.net/bugs/1029926

Title:
  Auto-login does not work with lightdm

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