Bug#1879: Emacs shell mode weirdness - looks like C code bug

[CD Rasmussen <cdr@sme.siemens.com>]

Ian, I think the problem might be local to your system.  I'm running a
pretty virgin system that was recently built from scratch and I can
run that command in emacs with no problem.

Was there anything enlightening in the *Messages* buffer?
The last 2 lines should just say:
Loading shell...
Loading shell...done

Try:
M-x set-variable
debug-on-error
t
M-x shell

Anything interesting, like permission problems or a lower level call
that you can try manually yo get closer to the problem?

Costa