As i read all the information you've posted it seems to be looking fine but you have to delete all the users from the passwd and shadow file not just only root.
Well i am not familiar with oracle installation but as if you are getting the message "ora**** running out of memory" then that means the /tmp is acquiring the space more than available so it would...
:) Your issue can be resolved by using either NIS or LDAP but
according to me it would be good if you start with NIS once you feel comfortable with NIS then go for LDAP.
May be following link...
:) well i am new to solaris but i love solaris coming to the question of uploading the patch , as far as my knowledge goes we can install the patches from init level 3 also.