Progress that you can log in fine.
Now onto root - I'm not sure that copying the password from alarm to root will work, problem is its encrypted, so even if you use the same password it appears in /etc/shadow differently (due to salt).
So the way that passwords are deleted is to just remove *ALL* text between the :: which means no password. Make sure when you edit it though that you don't remove any ":" - that is used to separate the fields - so need to make sure you have the right number of fields.
IIRC ether "su" OR "login" are a bit fussy when logging in as rot without a password. Try both, and when asked for the password just hit (return).
[TheSaint: Problem is how do you edit a root file, when you don't have root access - thats why you pop the sd card ...]