Hi Saif,
If you put the arcotwebfort.log file in debug mode it will give you the reason why it is failing. To make the log files in debug, you have to do the following-
1. Login as master admin
2. Go to instance management and click on the instance you want to enable for debug logging
3. Go to logging section and make the log levels in DETAIL.
4. Restart the services.
You will be using the Java aaplet client i beleive so the Java console logs will also show you some relevant information if the client is getting loaded. You are tryin to create the ArcotID for the user under the LDAP organization right so are you specifying the org name as well. Make sure that the LDAP org which you created is not set as the DEFAULTORG in admin console because LDAP org is only for read purpose.
Can you create any other credentials? Try creating a user under DEFAULTORG and then create the ARCOTID for that user, see if that succeedes.
Thanks
Namish