For some weird reason, vpopmail doesn't look for /etc/passwd per default(!!!) so you have to explicitly tell it to do so.
1. Go to the vpopmail source directory
2. Reset the source with "make distclean"
3. Reconfigure with "./configure --enable-logging=y --enable-passwd=y"
4. Recompile with "make"
5. Re-install with "make install-strip"
6. Finally, restart qmail with "service qmail restart"
Here's the full command-line:
"make distclean; ./configure --enable-logging=y --enable-passwd=y; make; make install-strip; service qmail restart"