Any new user creation gets: unable to log into user account error

Sort of reposting from http://discussions.apple.com/thread.jspa?threadID=2795507&tstart=0 as that initial question was answered.
Anyway, running an xserve managing all network accounts (only local accounts are a local admin on each system). DNS checks out and all current users can log in fine. However, it seems any new user I create keeps getting this wonderfully ambiguous error. I've tried Guest (but figured it probably interfered with the Guest Account), Student (but thought it might be interfering with a group of the same name), Guest Student, and Temp User.

Just making sure, you have selected the home location, and then actually pressed the "Create home" button? I have missed it few times and then wondered why it is not working. Then check the home folder location that it is actually there and created successfully.
Yeah, and then hit Save!
Message was edited by: VincensoXFIN

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