Rstudio Server: Error: Incorrect or invalid username/password

Hi.

I wanted to try out Rstudio server but I am having problems with the authentication. I am able to successfully connect from localhost to remote server (with Rstudio server on it) using ssh and trafficing the remote 8787 port to my localhost:1277.
But I am not able to connect with username & password I am using on the remote server. I also tried to create a new user (via useradd) but the problem persists Error: Incorrect or invalid username/password.

The userid should be in the required range. Also the users have their home directory.

The etc/pam.d/login looks like this:

#%PAM-1.0
auth [user_unknown=ignore success=ok ignore=ignore default=bad] pam_securetty.so
auth       substack     system-auth
auth       include      postlogin
account    required     pam_nologin.so
account    include      system-auth
password   include      system-auth
# pam_selinux.so close should be the first session rule
session    required     pam_selinux.so close
session    required     pam_loginuid.so
session    optional     pam_console.so
# pam_selinux.so open should only be followed by sessions to be executed in the user context
session    required     pam_selinux.so open
session    required     pam_namespace.so
session    optional     pam_keyinit.so force revoke
session    include      system-auth
session    include      postlogin
-session   optional     pam_ck_connector.so

I have copied it to etc/pam.d/rstudio per instruction.

The pamtester is not available in the free version of RStudio Server.
Any idea?