Network Account Cannot Log On

New, fresh install of 10.8.2 OS X Server. DHCP, DNS, Open Directory, File Sharing all working. Server hostname is set to myserver.private. Two users are created:

• test1 (and other accounts) has a network home, on AFP-shared Users, enabled for Home Directories
• test2 home is set to Local Only

On an MBP 10.8.2, successfully joined to myserver.private, I try to log-in with those two network accounts. One works, the other does not:

• test2 is able to log-on without a problem, log-out, and log-on, and so on,
• test1 seems to authenticate, but cannot log on, displays message "You are unable to log in to the user account "test1" at this time. Logging in to the account failed because an error occurred."
• After failing with test1, test2 will also produce the same error, until I log-in and log-out successfully with a local MBP account, or it has been rebooted.

The only error related to test1 that I can see in the Console logs is:

authorizationhost[1197]: ERROR | -[HomeDirMounter mountNetworkHomeWithURL:attributes:dirPath:username:] | PremountHomeDirectoryWithAuthentication( url=afp://myserver.private/Users, homedir=/Network/Servers/myserver.private/Users/test1, name=test1 ) returned 64

Now, if I change test1 home directory setting (using Server.app) to "Local Only", I will be able to log-in on the MBP, however no home directory is provided (it serves the root of the local file system). If I log-out, and then use the Server.app to change it back to the previously set network home, I will be able to log-in with this account on the MBP with test1, but not with any other accounts that have a network home directory.

Any ideas why I am getting the "You are unable to log in" error in the first place? Many thanks for any hints...