I have successfully launched my EC2 instance and I am able to access it using ssh connection.
If I try to create a new user account I get the following error:
# sudo adduser test
Adding user `test' ...
Adding new group `test' (1001) ...
groupadd: cannot rewrite group file
adduser: `/usr/sbin/groupadd -g 1001 test' returned error code 10. Exiting.
If I check the permissions for /etc/group it gives me:
# ls -la /etc/group
lrwxrwxrwx 1 root root 14 Dec 15 12:59 /etc/group -> /vol/etc/group
I am using EBS volume that I have attached to my instance. I don't know if this is causing the problems somehow.