Checking further, it appears this issue is a result of the customer having a NetBIOS domain name (pre-Windows 2000) that includes a “.” (.com).
Microsoft reportedly dropped support for this in NPS with the release of Server 2008 R2.
Contrary to what others have said, you do not need to rename your domain or back rev to 2008 non-R2.
I was able to resolve this issue by adding a reg key to force authentication to use the DNS name, instead of the NetBIOS name.
(See: http://www.experts-exchange.com/OS/Microsoft_Operating_Systems/Server/Windows_Server_2008/Q_27851388.html)
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