Error/Failure adding user to AD

I am having trouble adding a user to AD with the following code:

public static DirectoryEntry  CreateNewUser(string samAccountName)
{
	//set the LDAP qualification so that the user will be created under the
Users
	//container.
	// GetLDAPDomain will read in the ADServer value from the web.config and 
will return it
	// as an LDAP path eg DC=SVR1, DC=HEADOFFICE, DC=NET.
	string LDAPDomain ="/CN=Users," + GetLDAPDomain() ;
	DirectoryEntry oDE= GetDirectoryObject(LDAPDomain);
	DirectoryEntry oDEC=oDE.Children.Add("CN=Testuser","User");
	oDE.Close();
	return oDEC;

}


private static DirectoryEntry GetDirectoryObject()
{
//please note ADUser & Pass are Domain Administrator details 
currently	DirectoryEntry oDE;
	oDE = new 
DirectoryEntry(ADPath,ADUser,ADPassword,AuthenticationTypes.Secure);
	return oDE;
}

GetDirectoryObject appears OK as i use it to perform a directorysearch
which 
works well. When running the above code the following line throws the 
following exception:

line in question:
DirectoryEntry oDEC=oDE.Children.Add("CN=Testuser","User");

Exception info:
[COMException (0x80005000): Unknown error (0x80005000)]
   System.DirectoryServices.DirectoryEntry.Bind(Boolean throwIfFail)
   System.DirectoryServices.DirectoryEntry.Bind()
   System.DirectoryServices.DirectoryEntry.get_IsContainer()
   System.DirectoryServices.DirectoryEntries.CheckIsContainer()
   System.DirectoryServices.DirectoryEntries.Add(String name, String 
schemaClassName)

Dev/Testing Environment is as follows:
Single Machine IIS Server AND Domain Controller
Windows 2003 STD SPK2
VIS Studio 2003
..NET 1.1
Application using Basic Authentication (this is a must)
App Pool Identity=network service

I have tried running the code impersonating the administrator details.

Any help is much appreciated