Yupp, I really think you have screwed up your permissions. I bet an 'ls -lad / ' or 'ls -lad /etc' will show "rwx------" or similar.
Begin by 'chmod 755 / ' and see if things start to work. If not, the easiest way to get everything right is probably to reinstall MDK.
If that's not possible you could try
chmod -R 755 /
chmod 400 /etc/shadow
chmod 600 /etc/shadow-
chmod 700 -R /home
This could have some security implications if you have a multi user system (other users will be able to read log files
and stuff they normaly wouldn't).
libnss_nisplus is used if you login against NIS+ (Suns Directory Service, similar to Active Directory, LDAP or NDS).
It's a default in /etc/nsswitch.conf