New users and firewall?

[Dene Stringfellow]

When I use the following command:

useradd -n <user name>  -p <password>    (- the password is a
combination of upper and lower case letters and numbers)

the account appears to be created.

However when I try to login as that user I get the login error: 

Login incorrect.

Also the /home/<user> directory doesn't get created!

If login remotely using Webmin and check the user account under
Users and Groups I can see the password in clear text in the
Pre-encrypted password field. If I then cut the password from 
the Pre-encrypted password field and paste it into the Normal 
password field, select the Normal password field radio button and 
then save the changes and and go back into the user account I can 
see the password now appears in the Pre-encrypted password field 
in encrypted mode. Now I can login as that user!

Is this something to do with the default active firewall?
Something is not quite right here. Could someone please point out 
what I have done wrong?

Lastly, is there any way to add users via the terminal without the
password showing on screen in plain text?

Thanks in advance for your assistance.

Regards

 ---------------------------------
 Dene Stringfellow