ORA-16785: the database is not in ARCHIVELOG mode
Cause : The database is in NOARCHIVELOG mode, when it is either a primary database or a standby database that is being switched over to be a primary database.
Action - How to fix it : DBA Scripts :: www.high-oracle.com/scripts
Reset the database to ARCHIVELOG mode by issuing ALTER DATABASE ARCHIVELOG command.
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.