PHP 5.2.0 and 5.2.1 (and maybe later versions) ship with a configuration file (php.ini) that points to a session directory that does not exist. The session directory is used for session specific data such as the users login details so without that directory existing and being writeable by the web server, logins will not work.
To fix this either edit your php.ini and change the session.save_path to point to a directory that exists and is writeable by the web server.
If you can not do this then you will have to talk to your host and ask them to do it for you.

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