diff --git a/configs/sim/include/README.txt b/configs/sim/include/README.txt
index 2719aa5957c..6a9af0889a9 100644
--- a/configs/sim/include/README.txt
+++ b/configs/sim/include/README.txt
@@ -41,7 +41,10 @@ README
 
         xxd -i image >nsh_romfsimg.h
 
-    5. Re-package the modified /etc directory
+    5. Edit nsh_romfsimg.h, mark both data definitions as 'const' so that
+       that will be stored in FLASH.
+
+    6. Re-package the modified /etc directory
 
        tar cvf etc.tar etc
        gzip etc.tar
diff --git a/configs/sim/nsh/defconfig b/configs/sim/nsh/defconfig
index ae935e2a181..ff0841504ed 100644
--- a/configs/sim/nsh/defconfig
+++ b/configs/sim/nsh/defconfig
@@ -574,7 +574,8 @@ CONFIG_EXAMPLES_NSH=y
 # File System Utilities
 #
 CONFIG_FSUTILS_PASSWD=y
-CONFIG_FSUTILS_PASSWD_PATH="/tmp/passwd"
+CONFIG_FSUTILS_PASSWD_PATH="/etc/passwd"
+CONFIG_FSUTILS_PASSWD_READONLY=y
 CONFIG_FSUTILS_PASSWD_IOBUFFER_SIZE=512
 CONFIG_FSUTILS_PASSWD_KEY1=0x12345678
 CONFIG_FSUTILS_PASSWD_KEY2=0x9abcdef0
@@ -667,7 +668,6 @@ CONFIG_NSH_DISABLE_LOSMART=y
 # CONFIG_NSH_DISABLE_MOUNT is not set
 # CONFIG_NSH_DISABLE_MV is not set
 # CONFIG_NSH_DISABLE_MW is not set
-# CONFIG_NSH_DISABLE_PASSWD is not set
 # CONFIG_NSH_DISABLE_POWEROFF is not set
 # CONFIG_NSH_DISABLE_PS is not set
 # CONFIG_NSH_DISABLE_PUT is not set
@@ -683,8 +683,6 @@ CONFIG_NSH_DISABLE_SHUTDOWN=y
 # CONFIG_NSH_DISABLE_UMOUNT is not set
 # CONFIG_NSH_DISABLE_UNAME is not set
 # CONFIG_NSH_DISABLE_UNSET is not set
-# CONFIG_NSH_DISABLE_USERADD is not set
-# CONFIG_NSH_DISABLE_USERDEL is not set
 # CONFIG_NSH_DISABLE_USLEEP is not set
 # CONFIG_NSH_DISABLE_WGET is not set
 # CONFIG_NSH_DISABLE_XD is not set