Just read this on apples web discusion forum by a user named jbk:
A few days ago I reported a problem when logging in from a client computer as a user hosted from our Xserve. The problem was that only the user's Library and Desktop folders showed up. When connecting via AFP, all the folders showed up as expected.
That should have led me to believe that there was a problem with the home directory location, but since the login proceeded w/o problem (w/ no error messages about the home directory location) I thought the problem lay elsewhere.
So, as it turns out, you need to change the home directory location from Local (with share point selected) to Network. I couldn't find documentation about this change anywhere, and from what the lady at Apple said, it sounds like this has been a common issue and they are "tracking it."
So, I hope everyone can spread the word about this change. Good luck to all.