I installed a new CiscoWorks server for QPM and configured it for Single-on to use my LMS server as Master. I was hoping that the users configured in the LMS application would gain automatic access to the new QPM application, however it seems I still need to manually add them on the new server. Is this the way it's supposed to work?
This is correct. Single Sign-On only does authentication. Authorization is left up to either the local server's database, or ACS (if the local server is integrated with ACS). So, if you're using CiscoWorks Local authorization, then the users need to be added to all SSO servers. You only need to give them passwords on the SSO master, but they need to have the proper roles on all servers.