OD Replica problem

I am trying to create an open replica server. And I get this error. OD Master is brand new.

Any ideas on how to fix this?

Creating from terminal I get this error

sso_util command failed with status 2

2012-09-22 11:58:53 +0000 _preflightLDAPReplica: could not read the Kerberos realm from the master server.mydomain.com

2012-09-22 11:58:53 +0000 Not creating replica due to failure to read Kerberos realm from master. (error = 78)

2012-09-22 11:58:53 +0000 Not creating replica due to preflight failure.

2012-09-22 11:58:53 +0000 Not creating replica due to preflight failure. (error = 78)

Creating from Server Admin, I get an error "Your server can not become a replica of server.mydomain.com because its directory contains augment user records"

Any feedback will be greatly appreciated.

Running 10.7.5