I have the same problem.
machine connected to network.
boot.
log in as DOMAIN\first.last.
shut down computer.
unplug network cable.
boot.
log in as DOMAIN\first.last.
 "authentication failure"

I can only log in with local Linux accounts at this point.

I believe if I then plug network cable in, and `sudo /etc/init.d/lsass stop` 
then `sudo /etc/init.d/start`, that I can
then switch user, `su - DOMAIN\first.user` , successfully.
(FYI: `sudo /etc/init.d/lsass restart` does not work.)

-- 
password caching no longer works
https://bugs.launchpad.net/bugs/509934
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