Seems like this has been a major issue in many Drupal installations. After reading through endless articles on this bug, here are the two patches I’ve applied to different installations for Drupal 4.7.6:

http://drupal.org/node/6696#comment-182857

Symptom: I cant log in even though I entered the correct username and password. It just reloads the page with the log in, and also shows that I am logged in my member’s online block.

Solution: In user.module, comment out
sess_regenerate();
return ‘user/’. $user->uid;

so that it looks like

//sess_regenerate();
//return ‘user/’. $user->uid;

This was also a common problem under 4.7 and I know that people have filed bug reports, but nothing has been done about it in 4.7, and now it seems that the same bug is in 5.0. I’m off to go see if someone has filled a 5.0 bug report. Does anyone know why this bug has not been dealt with? Its quite an old one actually.

http://drupal.org/node/83822#comment-200047

I had the logon problem with a 5.0 beta 2 website.

Classic Symptoms:
Logon screen returned after logon.
Could not access admin.
Clearing cookies always fixed the problem temporarily.
Firefox and IE both exhibited the issue.

No tests of other browsers.
No problem with the 5.0 final release version.

The fix for me was to add one line to the settings.php file for the beta 2 website:

ini_set(’session.cookie_domain’, ‘mydomain.org’);