Create new user account - Can't log in after creating the other account

Using a VM in Virtual Box running Lubuntu :

I've created a new account using the following :

klak@klakBox:~$ sudo useradd james
[sudo] password for klak: 
klak@klakBox:~$ passwd james
klak@klakBox:~$ sudo passwd james
Enter new UNIX password: 
Retype new UNIX password: 
passwd: password updated successfully

I then logged out of my account and tried logging into the one that I created, it didn't work.

I restarted the VM and tried again, still didn't work.

I thought I might have caps on, but this gives an error.

Password entered just leaves me on this screen :

Password entered incorrectly gives :

I'm not sure why this isn't working,

cheers