I am not sure if anyone else has run into this, but i did today when setting upo a samba server.
http://lists.gobolinux.org/pipermail/gobolinux-users/2007-February/004413.ht...
In an nutshell you get an error like: "usermod: invalid numeric argument", or the user groups are never assigned, etc. So I have been managing manually. I get the exact same symptoms, etc (but doing things like appending groups, etc).
Apparently it can be fixed by downgrading Shadow package to 4.0.17, however with a quick little "rpm -qa | grep shadow", I can see the version with Centos 5 is shadow-utils-4.0.17-12.el5.
I have not spent much time digging in deeper as of yet, but wanted ot see if any others have had this issue in Centos 5.
DK