I am having the same problem, only worse. After I install VL-Lite or VL-Mini as my only OS on the hd, I get precisely this behavior, but it happens to me every single time. Consequently, I have never been able to login to the desktop. In contrast, VL-Soho installs perfectly with no problems. However, my system is too old to run it quickly enough to be usable, so I would like to use VL-Lite or VL-Mini, but as described, I can never login, either as root or as the user I setup during installation.
Moreover, the "Start JWM" and "Start Fluxbox" buttons on the login screen do not seem to be functional. When I click on either of them, their dialog window disappears, then re-appears after about thirty seconds. The "Shutdown" and "Reboot" buttons on the same dialog work as expected.
I suppose this post will have to serve as an additional confirmation of the problem for the developers, but if anyone has any suggestions for resolving the issue, I would be grateful. Vector Linux Soho is the only distribution I have been able to get to work correctly on this old laptop, so I am eager to see the lighter versions provide some new life for it.
P.S.: VL-Standard does not install at all.