Caused due to faulty permission checking in xkb. Details posted at http://lists.freedesktop.org/archives/xorg-devel/2009-September/002282.html Patch attached below (this should go into 1.7 release, and be committed to xorg trunk by remi)
Created attachment 205648 [details, diff] Check permissions on XKM_OUTPUT_DIR
Patch is in master and nominated for 1.7.1 Though we'll definitely ship that patch for 1.7.0 Yay :)