Oops, I just noticed that the addUser function in /etc/init.d/tc-config is only called if booting with user=foo where foo is other than tc. I also noticed that the /etc/passwd file in core.gz already has an entry for tc.
Therefore, I solved my problem by changing this line in /etc/passwd
tc:x:1001:50:Linux User,,,:/home/tc:/bin/sh
to this
tc:x:1000:50:Linux User,,,:/home/tc:/bin/sh
Solved
P.S. If you need to modify your core.gz for some reason, here are the steps I used:
# mkdir /tmp/dest
# cd /tmp/dest
# gunzip -c /path/to/core.gz | cpio -i
-> change /tmp/dest contents
# cd /tmp/dest
# find . | cpio -H newc -o | gzip -9 > ../core.gz-new