Submitting the new username does work as expected, so this seems to be a password problem. I have no problem with user "ad-min" to log in. It has of course the "Is administrator" property set.
The UI re-uses / displays the username you did supply and adds it again into the user name field but it strips these XSS characters ("<", ">", "\"", "'", "%", ";", ")", "(", "&", "+", "-") for security reasons. That's indeed unexpected ...