As per this thread in the forum viewtopic.php?f=9&t=3474, the issue for me was firefox changing the case of my username in the AutoComplete. Once I worked out how to disable the autocomplete in firefox, this then worked.

Was there a resolution to this? I have exactly the same problem after installing Ubuntu Client 12.04 LTS and then Amahi. I'm using the user created during the installation process and can login to Ubuntu using this user, but can't use this user when logging in to trying to logon to the Amahi Dashboa...