Trying to create a work item on TFS 2010 Beta 2 fails with unsupported value in the Assigned To and Crreated By fields (TF20015) error.

Question

We went through number of issues trying to create a project all related to the creation of the SharePoint portal. By manually setting accounts and permissions we managed to go through this step, and now that we have a project we cannot create work items. Seems like these issues are all related to AD, but I am not yet sure what exactly causes the problem as it does not look like a firewall issue in our case.