[plug] odd new file permissions on old debian box

[Mike Holland]

# touch x ; ls -l x
--wS--s---  1 root root 0 Apr 21 12:46 x
# ls -ld .
drwxr-xr-x  13 root root 4096 Apr 21 12:46 .
# umask
0022
# umask 0 ; touch x1 ; ls -l x1
--wS--s---  1 root root 0 Apr 21 12:47 x1
# umask 777 ; touch x2 ; ls -l x2
---S--S---  1 root root 0 Apr 21 12:48 x2

What affects new file permissions, aside from umask and parent-dir perms?

This is a debian/sarge webserver that has been running for some years
unpatched, and recently apt-get-upgraded (using archive.debian.org.)

I tried creating a brand new user:

# adduser myk
...

Then ssh in:

myk at bar:~$ touch foo
myk at bar:~$ ls -la
ls: reading directory .: Permission denied
total 20
drwxr-xr-x   2 myk  myk   4096 Apr 21 12:55 .
drwxrwsr-x  18 root staff 4096 Apr 21 12:54 ..
-rw-r--r--   1 myk  myk    414 Apr 21 12:54 .bash_profile
-rw-r--r--   1 myk  myk   2044 Apr 21 12:54 .bashrc
-rw-r--r--   1 myk  myk     59 Apr 21 12:54 .zshrc
---Sr-x--T   1 myk  myk      0 Apr 21 12:55 foo

Why permission denied? I'm very confused now.
Unsurprisingly, the database is having difficulty creating new tables on 
this system.

help please!?