mobile account home folder dual dir 10.6.8

Hi I'm trying to setup mobile home folders for AD users in a dual directory setup. Steps undertaken so far; binding of the client has been done. creation of OD group with AD member, applied managedclient preferences with network home folder locations, sync preferences etc. to the OD user group. I get the create a mobile account with PHD dialog box. Select create now, then get the error; Unable to create mobile account. There was a problem while creating or accessing "/Network/Servers etc. etc. Am not using Augmented records or deriving UNC path from home from AD.