To be honest... I expected to get a complete tusc output to see the context. :-)
But nevertheless, it's your "-cread" stty setting that worries me. Could you try a "stty cread" before doing the rm -i?
If that does not help, we should check if it's the stty setting is involved at all. Take a "good" user without problems and do a.
stty -g >/tmp/stty-settings
Then logon as the "bad" user and enter:
stty $(cat /tmp/stty-settings)
Let's see what happens...
Dietmar.
"Logic is the beginning of wisdom; not the end." -- Spock (Star Trek VI: The Undiscovered Country)