I'm sorry for the cryptic title of the message, it should be "Radius extension dll". It's also an error stating 252 PCMCIA clients, It should have been 352..
Anyway, I have sorted this one out. It seems that in my case all the Cs-services must run under local system account. This could be read from my domain security log which showed an event 577 for each failed attempt. This indicates an attempt to act as part of the operating system. The appropriate solution to this is using local system account, and it works.