Thanks

Please take a look at the log when you're getting that error message, maybe there's more info there. You might wanna set the log level to DEBUG to get more info (set that in the Advanced Settings section).
The settings, groups and user info is stored under the .pulpTunes directory, under your user directory. In windows for example, that'd be C:\Documents and Settings\youruser\.pulpTunes
I'm interested in trying to replicate your problem. It'd be great if you could send me through a private message the files under that dir: config.ini, groups.json and users.json
If you want you can delete all those files and restart the server to start off with a clean slate.