I also spent more than an hour to fix this as I didn't know where to look, but I found it
To fix this you need to edit the file '/usr/kde/3.5/share/config/kdm/kdmrc'
I think it got overwritten during the upgrade and isn't included in the protected config files.
What you need to change in that file is the following:
1) Look for the section starting with
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[X-*-Greeter]
2) Look for the theme setting and check that it is pointed to the correct one, I needed to edit it to point to the sabayon one.
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Theme=/usr/kde/3.5/share/apps/kdm/themes/SabayonOpenFuture/
3) For me the UseTheme setting was missing and this defaults to false, so add it and set it to true
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Theme=/usr/kde/3.5/share/apps/kdm/themes/SabayonOpenFuture/
UseBackground=true
UseTheme=true
This should give you the default sabayon login back.
For the more GUI oriented people, you can also install the package 'kde-misc/kdmtheme'. This is a module for the KDE Control Center and adds an option under System Administration called 'KDM Theme Manager'