Here's something interesting. If i type in "quark login" as the user i get this:
login: /home/jason/gen2c/meta-clanton_v1.1.0-dirty/build/tmp/work/i586-poky-linux/shadow/22.214.171.124-r14/shadow-126.96.36.199/libmisc/loginpromto.c:164: login_prompt: Assertion 'wlen == (int) len -1' failed.
And then the login screen is prompted again.
Yes that is what I'm seeing, but logging in as root does not work.
Are you sure you are booting from the IoT image? Do you mind posting a picture of your grub menu, the contents in your sd card and a picture similar to the one I posted? This last picture should have you logging in as root and the output error.