Just as a heads up to anyone else that might run into this error as it took
me some tinkering to figure out what was wrong.

In our case the IfolderProxy user had an expired password.

You pretty much have 2 options, either change the expire date into the
future and then unset it or change the password (if this is your IT policy
for service accounts) and run the simias-server-setup binary in
/opt/novell/ifolder3/bin and reconfigure the server.
Its probably possible to change the password by hand as well in a config
file but this was quickest for me. Can't change it throught he admin
interface because the server isnt responding.

Hope this will save someone a few grey hairs :-)