KBA 1724785 is similar and a 1st place to check is the entitlement user. There are other KBA's that mention the entitlement user type, or set with no initial password, etc. Possibly as a test try a different type entitlement user even an admin and see if that's related to the problem. It's not a common occurrance.
The sec directory is usually associated with SNC. Do you have SNC enabled and more importantly are you using an SNC string in the entitlement tab?
Regards,
Tim
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