Right now if I try to add a non-system user not in the university's Kerberos realm I am prompted for a Kerberos password anyway. Obviously there is no password to be entered, so I just press enter and see:

passwd: Authentication token manipulation error
passwd: password unchanged

Typing passwd newuser has the same issue with the same message.

I tried using pwconv in the hopes that only a shadow entry was needed, but it changed nothing.

I want to be able to add a local user not in the realm and give them a local password without being bothered about Kerberos.

I am on Ubuntu 10.04. Here are my /etc/pam.d/common-* files (the defaults that Ubuntu's pam-auth-update package generates):

account

# here are the per-package modules (the "Primary" block)
account [success=1 new_authtok_reqd=done default=ignore]        pam_unix.so
# here's the fallback if no module succeeds
account requisite                       pam_deny.so
# prime the stack with a positive return value if there isn't one already;
# this avoids us returning an error just because nothing sets a success code
# since the modules above will each just jump around
account required                        pam_permit.so
# and here are more per-package modules (the "Additional" block)
account required                        pam_krb5.so minimum_uid=1000
# end of pam-auth-update config

auth

# here are the per-package modules (the "Primary" block)
auth    [success=2 default=ignore]      pam_krb5.so minimum_uid=1000
auth    [success=1 default=ignore]      pam_unix.so nullok_secure try_first_pass
# here's the fallback if no module succeeds
auth    requisite                       pam_deny.so
# prime the stack with a positive return value if there isn't one already;
# this avoids us returning an error just because nothing sets a success code
# since the modules above will each just jump around
auth    required                        pam_permit.so
# and here are more per-package modules (the "Additional" block)
# end of pam-auth-update config

password

# here are the per-package modules (the "Primary" block)
password        requisite                       pam_krb5.so minimum_uid=1000
password        [success=1 default=ignore]      pam_unix.so obscure use_authtok     try_first_pass sha512
# here's the fallback if no module succeeds
password        requisite                       pam_deny.so
# prime the stack with a positive return value if there isn't one already;
# this avoids us returning an error just because nothing sets a success code
# since the modules above will each just jump around
password        required                        pam_permit.so
# and here are more per-package modules (the "Additional" block)
# end of pam-auth-update config

session

# here are the per-package modules (the "Primary" block)
session [default=1]                     pam_permit.so
# here's the fallback if no module succeeds
session requisite                       pam_deny.so
# prime the stack with a positive return value if there isn't one already;
# this avoids us returning an error just because nothing sets a success code
# since the modules above will each just jump around
session required                        pam_permit.so
# and here are more per-package modules (the "Additional" block)
session optional                        pam_krb5.so minimum_uid=1000
session required        pam_unix.so
# end of pam-auth-update config