Hi,
Well useradd (or adduser which is symbolically linked to useradd) is the right command from the shell. Sounds like there is an error trying to update the /etc/groups file - by default a redhat system will create a new group which equates to the user name. Perhaps the permissions are wrong - a 'ls -l /etc/group' should look like this :
-rw-r--r-- 1 root root 650 Jul 25 21:20 /etc/group
If its different then do (as root)
chmod 644 /etc/group
Another tactic would be to specify an existing group to see if that works (it wouldn't need to lock /etc/group for writing). For example -
/usr/sbin/useradd new_user -g users -n
-n suppresses the redhat specfic feature of creating a group equivalent to username.
Otherwise you could try using 'linuxconf' (with or without X) or even going to single user mode with 'init 1', mounting the /usr filesystem manually if necessary, then doing the '/usr/sbin/useradd....' again.
Hope this helps, Iain