A quick final update..
My wallet is very old so I took the step and created a new one, setup all the
various logins etc.
Made the changes to the /etc/pam.d/kdm and installed pam-kwallet again, logged
back in again and everything is working as it should now.
Maybe my old .kwl or config files where corrupt or something who knows.
Sorry for the noise and thanks for this great addition to kde :-)
Fedora 20 - (Heisenbug)
Registered Linux user number #342953