Mallesh,
First of all, these are two different questions, you should have started two different threads. Anyway,
1. the root password expired: This is surprising, the root account is usually above such problems. Still, you can boot from the CD, choose to 'rescue' and follow the instructions.
2. users cannot create files: First of all, remove users from the bin, adm and all other unnecessary groups. Post ls -ld <path_where_user_creates_files> output.
Root account is expired