Same thing is still happening in CWP version: 0.9.8.8
Whenever you automatically add a new user account and then try to automatically delete that user account, it doesn't works and gives above mentioned error, meaning the user is still there and that name cannot be used anymore.
Up until now I simply created new users, although very annoying, it worked. Only today in version 0.9.8.8 I had some more problems as they continued to be displayed in user account list, different usernames for the same domain name, which is ofcourse very confusing.
I did not know I had a session open, but thanks to the previous poster and I rebooted the whole server and after that it was possible to delete both accounts and re-create another one.
So there seems to be a problem with sessions somewhere, hope you can fix it.
Thanks.