What if you are not using Windows authentication?  I am using Forms authentication and am having the same problem.  I get the following error after I login as a valid user created in my ASPNETDB.MDF:

The specified display mode is currently disabled on this page. Make sure personalization is enabled for the current user.
Parameter name: value

Description: An unhandled exception occurred during the execution of the current web request. Please review the stack trace for more information about the error and where it originated in the code.

Exception Details: System.ArgumentException: The specified display mode is currently disabled on this page. Make sure personalization is enabled for the current user.
Parameter name: value

Source Error:

Line 25:                 break;
Line 26:             case "Design":
Line 27:                 this.webMan.DisplayMode = WebPartManager.DesignDisplayMode;
Line 28:                 break;
Line 29:         } // End switch

I assume that this is an authentication issue.

This should work the same way for forms authentication: by default, all authenticated users have the "modifyState" capability. This means that as long as you are authenticated, you should be able to switch to design display mode. One way to check that you are authenticated is by checking Page.User.Identity.IsAuthenticated.

If you override the default web.config with your own authorization rules in the <webParts><personalization> section, you should grant the desired user the "modifyState" capability. An example is shown below. You can programmatically check if the currently logged-on user has this capability through the wpmInstance.Personalization.IsModifiable property getter.

<webParts>
   <personalization>
      <authorization>
         <allow users="MyUser" verbs="modifyState"/>
         <deny users="*" verbs="modifyState"/>
      </authorization>
   </personalization>
</webParts>

Hope that helps.

Helen