Microsoft Dynamics CRM 2011 - New User isn't recognised by server (External Error - No such object on server)

I recently created a new domain user on out company's Active Directory user list. ( domain\firstname.lastname )
I added a mailbox for the user to our Exchange 2010 server without issue. ( flastname@externaldomainname.co.uk )

I also went to put in a user on CRM. I typed the name 'firstname.lastname' into the User Name field, and it auto-populated the form correctly, which must mean it could access the Active Directory record.

However, when I try to save it, it comes up with the error:

"External Error - No such object on server.
The selected object could not be found. Verify that the object exists in both the database and the Active Directory."

The full log file for the error is:

Unhandled Exception: System.ServiceModel.FaultException`1[[Microsoft.Xrm.Sdk.OrganizationServiceFault, Microsoft.Xrm.Sdk, Version=5.0.0.0, Culture=neutral, PublicKeyToken=31bf3856ad364e35]]: Server was unable to process request.Detail:
<OrganizationServiceFault xmlns:i="http://www.w3.org/2001/XMLSchema-instance" xmlns="http://schemas.microsoft.com/xrm/2011/Contracts">
  <ErrorCode>-2147016656</ErrorCode>
  <ErrorDetails xmlns:d2p1="http://schemas.datacontract.org/2004/07/System.Collections.Generic" />
  <Message>Server was unable to process request.</Message>
  <Timestamp>2015-08-20T09:58:53.9550239Z</Timestamp>
  <InnerFault i:nil="true" />
  <TraceText i:nil="true" />
</OrganizationServiceFault>

I don't understand how CRM can not find the User when it's clearly on the Active Directory and it even auto-populated the New User form from the Active Directory record.

From what I've found out, this sort of thing happens when the GUID of the Active Directory User gets out of sync with the Active Directory GUID recorded in the CRM SQL server for the user. But this user is being created on CRM and therefore should not have an existing CRM User record.

Does anyone know what's going on, and how to fix it? (If it involves modifying the MS SQL server please give me the procedure as I'm better on MySQL.)
Andrew LanghammerDatabase AdministratorAsked:
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Feridun KadirPrincipal ConsultantCommented:
Did you try the format domain\ first name.last name for the  user name on the CRM record?

I appreciate that the form auto populated but who knows what goes on when the record is saved.
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Andrew LanghammerDatabase AdministratorAuthor Commented:
Huh, putting the exact same thing in manually as I'd had from the auto-populate function actually worked!
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