I installed DSfW into existing tree as. Install went successfully,
verification described in TID7001884 passes with flying colors, I was able
to join a workstation to domain and log in as Administrator.

But when an existing eDirecory user in DSfW partition tries to log in, the
behaviour is as if the password is incorrect - the password prompt
reappears. After 3 unsuccessful attempts, the intruder lockout policy kicks
in and the account is locked.

The Universal Password policy was created during DSfW install and user
objects seem to be associated with it. I had not activated Universal
Password before installing DSfW.

I tried changing the password for the user, but this doesn't help.