AD LDS Windows Principals - authenticating fails with ldp.exe

I am able to authenticate native AD LDS users in the Readers role successfully using ldp.exe and my app.  Now I want to test Windows Security Principals.  So on my LDS box I created a local Windows user under computer management.  Then I add the windows user to the member attribute of the Readers role. From another box I run ldp.exe and connect to my lds box.  When I try and do a simple bind using servername\username, I get:

leo