Looks like its a known issue. Here is the workaround from VMware.

To resolve this issue, remove the existing Active Directory Identity Source, and recreate it with a Domain Alias:

1. Log into the vSphere Web Client using the Admin@System-Domain credentials.
2. Click Administration.
3. Under Sign-On and Discovery, click Configuration.
4. Click the Active Directory identity source.
5. Under Actions, click Edit Identity Source.
6. Make note of the information in the identity source.
7. Click Cancel.
8. Under Actions, click Delete Identity Source.
9. Recreate the identity source using the short NETBIOS name in the Domain Alias field.
10. Click Test Connection.
11. Click OK.

Ref : http://kb.vmware.com/selfservice/microsites/search.do?language=en_US&cmd=displayKC&externalId=203551...