Just in case anyone else is also following this thread...
It's been a couple of weeks now and the problem is still not resolved.
LAN Cache works fine in a workgroup environment, but has some issues with credentials in a domain environment.
I have been informed by Kaseya support that this issue is now in hand with the developers and that this is a *bug* in LAN Cache.
I will do some testing of my own and post back here if I find any viable workaround.
Kaseya support did not provide an ETA.