Network/Mobile user can't login (or SSH) directly into Server

I have a network (& mobile) user who is cannot log directly into server…

$ ssh myserver

Last login: Wed Jan 9 09:36:33 2013 from 10.0.1.135

Could not chdir to home directory /Network/Servers/myserver.mydomain.com/Homes/myuser: No such file or directory

And from the Login Screen they'll get this error:

You are unable to log in to this user account "myuser" at this time. Logging in to the account failed because an error occurred.

How to fix this?

Mobile syncing appears to be working from user's MacBook. Though now I think about it the sync phase, did appear very rapid...so perhaps it's off too?!?

FWIW, here are the /Homes directory settings from Server.app: