you changed the permissions on the directory, but did you change the ownership and group? as in:
$ chown jimmy /home/jimmy
$ chgrp [your-group] /home/jimmy
your group is probably 'users' or 'jimmy' depending on what distro you are using. you can find out what group your users belong to in /etc/group
this may make a difference for you, im not sure.
with regards to starting gnome and getting kicked back to the login prompt... it might be that you have a broken environment variable or something like that. if you want to print out all your environment variables, you can run the 'env' command, it will spit them all out to a console screen for you. take a look at the man page for /etc/group for the meanings of the x:x:x lines.