Error when using PrincipalContext.ValidateCredentials to authenticate against a Local Machine?

I have a WCF service which contains a Login method that validates a username and password against the local machine credentials, and after a seemingly random period of time it will stop working for some users.

The actual login command looks like this:

public UserModel Login(string username, string password, string ipAddress)
{
    // Verify valid parameters
    if (username == null || password == null)
        return null;

    try
    {
        using (var pContext = new PrincipalContext(ContextType.Machine))
        {
            // Authenticate against local machine
            if (pContext.ValidateCredentials(username, password))
            {
                // Authenticate user against database
                using (var context = new MyEntities(Connections.GetConnectionString()))
                {
                    var user = (from u in context.Users
                                where u.LoginName.ToUpper() == username.ToUpper()
                                      && u.IsActive == true
                                      && (string.IsNullOrEmpty(u.AllowedIpAddresses)
                                        || u.AllowedIpAddresses.Contains(ipAddress))
                                select u).FirstOrDefault();

                    // If user failed to authenticate against database
                    if (user == null)
                        return null;

                    // Map entity object to return object and assign session token
                    var userModel = Mapper.Map<User, UserModel>(user);
                    userModel.Token = Guid.NewGuid();
                    userModel.LastActivity = DateTime.Now;

                    // Authenticated users are added to a list on the server
                    // and their login expires after 20 minutes of inactivity
                    authenticatedUsers.Add(userModel);
                    sessionTimer.Start();

                    // User