That would probably have to do with it.
I wish it was made more difficult to change the username or home folder name as that usually causes too much accidental problems...
(This part is kind of late for now, but can be useful for later reference)
If you would NOW have that Mac in front of you as a just purchased one, before setting anything in it, I'd recommend first a clean install of the OS. Just for starting as a clean table.
(Or, if/when eventually selling yours, install Mac OS X from discs. When after reboot it starts with user setup assistant, you can power the computer down. It will proceed from that point when the new owner powers it on)
If it's got a clean system, but an account with a name you don't like, there are a few
ways to
change the username. But if nothing is set up ever for that dummy account, in that case you might as well create yourself a completely new admin account, log out of the old one and in as the new one and then simply delete the old one.
And back to the single user mode, after you did the
/sbin/mount -uw / and then the lines earlier for getting the setup assistant to launch, were you able to get the new user created, and if so were the system preferences working successfully as that user?
(and when you'll see that line of
localhost:/ root# that is where you can start typing)