Why are you not checking your logs for what is happening?
I do not use Angstrom so cant really be of much use other than
suggesting what upstream expects the package to "act" like.
On one of my arch installs I installed GDM and setup passwordless
logins as the DOCs for GDM suggest. Have you tried the non timed
option?
AutomaticLogin=username
AutomaticLoginEnable=True
Also have you this this in pam.d/gdm?
auth sufficient pam_succeed_if.so user ingroup nopasswdlogin
then add a nopasswdlogin group and add the user to it? Not sure what
version of GDM you're on.