When I log in as a restricted user on linux rh fedora core 2, my home directory denys access to it, and then logs me out right away (in x11). And from the command line I just can't access my home directory. Although root works fine still. My home folder is owned by root 700. And my user folders are owned by the correct users. The only thing that I have changed on the system is that I turned on user directorys in the apache config file ( which enables users to have html files viewed on the server, per user account). And the I turned the userdirective to '/home/*/' in the httpd.conf file to. So that the server root directory(per user) is the user folder instead of a folder inside a user folder.

Double-check your home directory permissions again. Modifying Apache won't have any effect on you home directory when logging in locally.

The home directory needs to be owned by the user. It's expected to have read, write and execute access for the owner.

RedHat typically creates a unique group per user. The home directory should have that group as its group owner. Typically, you only give read and execute permissions to the group.

Since you want to allow Apache access, then the other user permissions need to allow read and execute for each directory from the top home directory through to the public_html directory (or whatever you set it up as).

So, again, as root, double check the directories themselves (ls -l /home) , verify the owner:group is correct, and make sure the permissions are correct (chmod 755 /home/<username>).