VPN issue on Lion Server 10.7.3

Hi,

I am having problems setting up a VPN server on Lion Server 10.7.3. When I try to connect using a Lion client (10.7.3.) I receive the error 'Authentication Failed'

I have created a new user, checked password and sharedkey and the error persists.

From server I have extracted the VPN log, please see it below.

Thanks,
Giraffe

Mar 19 18:45:31 panda racoon[372]: IPSec Phase1 started (Initiated by peer).
Mar 19 18:45:31 panda racoon[372]: IKE Packet: receive success. (Responder, Main-Mode message 1).
Mar 19 18:45:31 panda racoon[372]: IKE Packet: transmit success. (Responder, Main-Mode message 2).
Mar 19 18:45:31 panda racoon[372]: IKE Packet: receive success. (Responder, Main-Mode message 3).
Mar 19 18:45:31 panda racoon[372]: IKE Packet: transmit success. (Responder, Main-Mode message 4).
Mar 19 18:45:31 panda racoon[372]: IKEv1 Phase1 AUTH: success. (Responder, Main-Mode Message 5).
Mar 19 18:45:31 panda racoon[372]: IKE Packet: receive success. (Responder, Main-Mode message 5).
Mar 19 18:45:31 panda racoon[372]: IKEv1 Phase1 Responder: success. (Responder, Main-Mode).
Mar 19 18:45:31 panda racoon[372]: IKE Packet: transmit success. (Responder, Main-Mode message 6).
Mar 19 18:45:31 panda racoon[372]: IPSec Phase1 established (Initiated by peer).
Mar 19 18:45:32 panda racoon[372]: IPSec Phase2 started (Initiated by peer).
Mar 19 18:45:32 panda racoon[372]: IKE Packet: receive success. (Responder, Quick-Mode message 1).
Mar 19 18:45:32 panda racoon[372]: IKE Packet: transmit success. (Responder, Quick-Mode message 2).
Mar 19 18:45:32 panda racoon[372]: IKE Packet: receive success. (Responder, Quick-Mode message 3).
Mar 19 18:45:32 panda racoon[372]: IKEv1 Phase2 Responder: success. (Responder, Quick-Mode).
Mar 19 18:45:32 panda racoon[372]: IPSec Phase2 established (Initiated by peer).
Mar 19 18:45:32 panda vpnd[718]: Incoming call... Address given to client = 192.168.0.51
Mar 19 18:45:32 panda com.apple.ppp.l2tp[718]: 2012-03-19 18:45:32 GMT	Incoming call... Address given to client = 192.168.0.51
Mar 19 18:45:32 panda pppd[757]: pppd 2.4.2 (Apple version 560.13) started by root, uid 0
Mar 19 18:45:32 panda pppd[757]: L2TP incoming call in progress from '192.168.0.3'...
Mar 19 18:45:32 panda pppd[757]: L2TP connection established.
Mar 19 18:45:32 panda pppd[757]: Connect: ppp0 <--> socket[34:18]
Mar 19 18:45:35 panda pppd[757]: CHAP peer authentication failed for Jeremy Adams
Mar 19 18:45:35 panda pppd[757]: Connection terminated.
Mar 19 18:45:35 panda pppd[757]: L2TP disconnecting...
Mar 19 18:45:35 panda pppd[757]: L2TP disconnected
Mar 19 18:45:35 panda vpnd[718]:    --> Client with address = 192.168.0.51 has hungup
Mar 19 18:45:35 panda com.apple.ppp.l2tp[718]: 2012-03-19 18:45:35 GMT	   --> Client with address = 192.168.0.51 has hungup
Mar 19 18:45:37 panda racoon[372]: IKE Packet: transmit success. (Information message).
Mar 19 18:45:37 panda racoon[372]: IKEv1 Information-Notice: transmit success. (Delete IPSEC-SA).

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