Why does Installer stay stuck on password enter screen when installing apps?

When installing apps through Installer (from .dmg disk images and .pkg packages), everything works smoothly until it asks me for a password. When I enter it, Installer goes back to the screen before it asked me for the password. When I click next, it asks me for my password, and the cycle repeats. I tried removing my password to no avail. I can install .pkg files from the sudo installer -pkg command. I dont know how to do this for installers that are in app form.

Same issue when trying to unlock locked preference panes in System Settings. Here is the log.
Apr 20 21:38:13 DKMBP authorizationhost[1834]: in pam_sm_authenticate(): Got user: DK
Apr 20 21:38:13 DKMBP authorizationhost[1834]: in pam_sm_authenticate(): Got ruser: (null)
Apr 20 21:38:13 DKMBP authorizationhost[1834]: in pam_sm_authenticate(): Got service: authorization
Apr 20 21:38:13 DKMBP authorizationhost[1834]: in od_principal_for_user(): No authentication authority returned
Apr 20 21:38:13 DKMBP authorizationhost[1834]: in od_principal_for_user(): failed: 7
Apr 20 21:38:13 DKMBP authorizationhost[1834]: in pam_sm_authenticate(): Failed to determine Kerberos principal name.
Apr 20 21:38:13 DKMBP authorizationhost[1834]: in pam_sm_authenticate(): Done cleanup3
Apr 20 21:38:13 DKMBP authorizationhost[1834]: in pam_sm_authenticate(): Kerberos 5 refuses you
Apr 20 21:38:13 DKMBP authorizationhost[1834]: in pam_sm_authenticate(): pam_sm_authenticate: ntlm
Apr 20 21:38:13 DKMBP authorizationhost[1834]: in pam_sm_acct_mgmt(): OpenDirectory - Membership cache TTL set to 1800.
Apr 20 21:38:13 DKMBP authorizationhost[1834]: in od_record_check_pwpolicy(): retval: 0
Apr 20 21:38:13 DKMBP authorizationhost[1834]: in od_record_attribute_create_cfstring(): returned 2 attributes for dsAttrTypeStandard:AuthenticationAuthority
Apr 20 21:38:13 DKMBP authorizationhost[1834]: in pam_sm_setcred(): Establishing credentials
Apr 20 21:38:13 DKMBP authorizationhost[1834]: in pam_sm_setcred(): Got user: DK
Apr 20 21:38:13 DKMBP authorizationhost[1834]: in pam_sm_setcred(): Context initialised
Apr 20 21:38:13 DKMBP authorizationhost[1834]: in pam_sm_setcred(): Got euid, egid: 0 0
Apr 20 21:38:13 DKMBP authorizationhost[1834]: in pam_sm_setcred(): Done getpwnam()
Apr 20 21:38:13 DKMBP authorizationhost[1834]: in pam_sm_setcred(): Done setegid() & seteuid()
Apr 20 21:38:13 DKMBP authorizationhost[1834]: in pam_sm_setcred(): pam_sm_setcred: krb5 user DK doesn't have a principal
Apr 20 21:38:13 DKMBP authorizationhost[1834]: in pam_sm_setcred(): Done cleanup3
Apr 20 21:38:13 DKMBP authorizationhost[1834]: in pam_sm_setcred(): Done seteuid() & setegid()
Apr 20 21:38:13 DKMBP authorizationhost[1834]: in pam_sm_setcred(): Done cleanup4
Apr 20 21:38:13 DKMBP authorizationhost[1834]: in pam_sm_setcred(): pam_sm_setcred: ntlm
Apr 20 21:38:13 DKMBP authorizationhost[1834]: in pam_sm_setcred(): pam_sm_setcred: no domain found skipping
Apr 20 21:38:13 DKMBP com.apple.SecurityServer[24]: UID 501 authenticated as user DK (UID 501) for right 'system.preferences.accounts'

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