Right so I tried the fix today but under 'username' that I mentioned above. I created a user called UpperMe and the account created successfully automatically and under the services menu showed
Username
upperme
I changed line 1230 in /components/modules/direct_admin/direct_admin_php
from
'username' => isset($vars['direct_admin_username']) ? $vars['direct_admin_username'] : null,
to
'username' => isset($vars['direct_admin_username']) ? strtolower($vars['direct_admin_username']) : null,
and NOT 'direct_admin_domain' as suggested by @Blesta Addons above.