YOU DO NOT HAVE TO RE-INSTALL MOUNTAIN LION -
If you find yourself locked out of your ML administrator account - and/or all other admin accounts and receive this message when entering the correct password: "You are unable to log in to the user account "xxxx" at this time. Logging in to the account failed because an error occurred" this is due to a misconfiguration in your server active directory set-up.
You need a new admin account - follow these directions to get yourself a new administrator level account on your mac with all your original files and settings intact - here we go:
STEP 1 BOOT INTO SINGLE USER MODE
Boot your affected Mac into Single User Mode by pressing Command + S at the chime
Note** if you are using rEFIt, highlight the icon which boots into the OSX installation you are currently locked out of and then press F2, nav down the menu options to Boot into single user mode and hit ENTER
STEP 2 MOUNT YOUR OS X INSTALLATION
Type: /sbin/mount -uw / at the prompt and hit enter.
STEP 3 TRICK OSX START UP INTO BELIEVING ITS BEING RUN FOR THE FIRST TIME
Type: rm /var/db/.applesetupdone
What this does is deletes a specific file OSX checks each time it runs to determine whether its running for the first time or if accounts have already been set up. By removing this file, when we reboot, OSX will assume this is a brand new set-up and will allow us to create new accounts.
STEB 4 REBOOT
STEP 5 - SET UP A NEW ADMIN ACCOUNT --- BUT DO NOT USE THE SAME NAME AS ANY EXISTING ACCOUNT
If you use the name of an existing account, you will overwrite the files of that account. Just set up a new unique admin account and then log in. once you are logged back into your Mac with administrator access, you can correct the issues which locked you out in the first place.
If this fails or you prefer another method of gaining access - I recommend the open source ophcrack application - it works pretty well too and detailed instructions can be found at SourceForge.
Hope this helps some of you experiencing some of the same ML and ML Server issues I am run into. Reformatting a partition is a last ditch solution.