Hmm... try putting domain\jallen in the field [where, of course, 'domain' is your domain name]. I am at work now, and just tested it on a machine. Worked fine for me. I was able to add a domain user.
Do you thing because you are doing that locally and I am doing it through VPN ?

I have to try locally to log in to WS-A as a domain admin not local admin and see if I can add John Allen.

Meanwhile could you please try to log in as a local admin and then try to use VPN and see if you are facing same my problem