I also had this problem. As best I can tell it seems to be related to the selection of webserver and issues that result from file ownership/permissions. (The other option is that non-ascii characters or other invalid characters are being used in one of the fields but this was not the issue for me.)
When I had nginx+php-fpm set as my webserver I received the error mentioned by OP and was unable to create new user accounts. The error would appear immediately, not after any processing time.
Having had a lot of problems in the past with file permissions and PHP (not related to CWP) I decided to try switching the webserver to nginx+apache+php-fpm. After doing this I was able to create users without any troubles. (I used identical data to test with, copy and pasted from a local notepad app.)