When I create an account without password, Ubuntu still asks for it!

Not TOO bad ideas, but still not recommended:

In order to get a no password at login for the gui, you use the autologin options for your login manager lightdm or gdm.
lightdm system settings - user accounts - your username - automatic login
lightdm is the default, so check the gdm docs if you're using that.

In order to get no prompt for keyring you setup an pam script to run after login like this.

In order to get no prompt for sudo you visudo
%admin ALL=(ALL) NOPASSWD: ALL

This can break things, but in some situations it's what you need...

In order to get a no password user at command line/terminal/remote login you:

usermod -G nopasswdlogin username
passwd -d username
passwd -l username

To reset the password of an account if you're locked out

Recovery console - mount as rw - root shell:
passwd username then enter the new password
Reset keyring like this

If you're running an alternate install that boots to a terminal and you want auto-root term login:

You can use mingetty - edit /etc/init/tty1.conf
from this:
exec /sbin/getty 38400 tty1
to this:
exec /sbin/mingetty --autologin USERNAME tty1
from here.

The problem you are having is because passwords are encrypted, and stored in /etc/shadow

When making a password , a empty password is not the same as as a space.

To make a user with a blank password, you generate a password with

perl -e 'print crypt("password","\$6\$v/salt\$") . "\n"'

Be sure to change your salt to a random value

 perl -e 'print crypt("","\$6\$v/ABCDEF\$") . "\n"'
 $6$v/ABCDEF$HY8yMGuhCosSwpj9uwoGljFlVe6XMa8O1E2i6JXi6oiPrTP/9ifCEZK4vIkccMe9jbIyT3dRwM7t.PLHLU2jm/

Now add that to /etc/shadow, under the appropriate user name.

Fields in /etc/shadow are separated by colons, : The second field is the password

test:6$v/ABCDEF$HY8yMGuhCosSwpj9uwoGljFlVe6XMa8O1E2i6JXi6oiPrTP/9ifCEZK4vIkccMe9jbIyT3dRwM7t.PLHLU2jm/:15325:0:99999:7:::

For details, see

http://www.cyberciti.biz/faq/understanding-etcshadow-file/

http://leo.steamr.com/2010/11/how-to-create-a-linux-user-with-an-emptyblank-password/