Server is OES2SP3 on SLES10.4. Kanaka 2.7 installed and configured,
OS10.6 clients have no trouble authenticating via plugin and all
expected volumes mount.

On iMacs running OS X 10.7.3, installing the plug-in and configuring
it results in a succesful authentication test in the directory utiliy.
However, on bootup the login screen shows a red flag next to the
username and the message "network accounts are not available".

If we authenticate as a local user, command-k will successfully
connect to the server and mount volumes as desired. I have checked
afptcpd.conf on the server and verified that AUTH_NAM is set to DHX2

Any suggestions on where to look next?