added a new iMac to our domain, but when users attempt to login, the password field shakes as if incorrect. Checked and triple checked users network credentials. They can log in from other iMacs on the network.
Okay, so: Apple does discourage using .local, but in your environment it shouldn't really matter much...
Double check the following: is the time on the new iMac in sync with the server? And can you perform forward and reverse DNS lookups when logged in to the new iMac with a local account (Network Utility -> Lookup -> type in hostname of server and confirm it resolves to the server IP, then type in the server IP and confirm it resolves to the hostname of the server).
If the time doesn't match, make it match.
If DNS fails, double check the DNS settings on that iMac and confirm it's using your server for DNS. Your server should be the only DNS entry on the iMac and should be the only DNS address given out by DHCP. That should cause both forward and reverse lookups to resolve correctly.
In my experience these are the two most common reasons for an OD client to fail to authenticate a network user.