Unable to login in login shell(tty2 etc...)

System works great while in GUI. I tried to login to tty2 but I’m unable to do so. Once I enter the password and hit enter the tty starts to print ‘^@’ continuously and also shows the message ‘login incorrect’.

Probably not this if it works fine from GUI, but you could try ruling out a keyboard failure by checking no extraneous keys are detected while typing:

What about a terminal in GUI?

no issues at all. This only happens in the tty

Do you use bash or zsh in GUI-terminal / tty ?
Maybe you need to check their startup-files ?