I can confirm that this also happening with a windows 2003 active directory. Joining the active directory domain on the ESXi 5.1 host works. Adding my own username with administrator permissions on ESXi host also works.
After that logging into vmware vsphere client with "use windows session credentials" checkbox enabled gives username/password error. But manually filling in user name as either domain.ext\user or domain\user does work. Even leaving out the whole domain in the user name field works! My whole point was to use the "use windows session credentials" as I do not have a vcenter license.
Client OS for vmware vsphere client is windows 8 pro 32 bit, logged in as domain user.