Cannot login to new standard user accounts or reset their passwords on Mac OS X 10.9. Help?

Currently I am running Mac OSX 10.9 on a macbook air. For work, we ran some configuration changes according to CIS Benchmark guide for hardening macs, though no third party software was downloaded. I have full control over the admin account (it seems at least) however when I create new standard user accounts, I cannot log into them or reset their password (it says "password reset failed").

Some of the configurations we ran:

• We checked the system directory from world writable (CIS advises against having world writable applications or folders)
• Checked library folder for world writable
• Secure home folders (could this be the issue?)
• The root account is not enabled (but that is default from my understanding)

Do any of these impact the admin's ability to create and control standard user accounts?

I booted from the recovery partition and tried to fix system permissions, but that did not solve the issue. I also wasn't allowed to open terminal from the utilities window when booting from recovery.

Any thoughts? Very frustrated.