ORA-12950: SYSTEM tablespace specified as default permanent tablespace
Cause : SYSTEM tablespace was specified as the default permanent during database creation.
Action - How to fix it : DBA Scripts :: www.high-oracle.com/scripts
If default permanent tablespace is not specified,then SYSTEM will implicitly become the default permanent tablespace. Specify an alternate tablespace or omit the default tablespace clause and reissue the CREATE DATABASE statement
Well, the reason for above error is that i have taken the above script from a 11g database and running it on 10g database. 11g has bring some changes in password management. Below code is executed on 11g and user created successfully, which is expected result.