I am also seeing this issue. Did anyone get back to you since your post? I also notice that if I attempt to login with the wrong user or password, it gives an authentication error. Additionally if I disconnect and reconnect the server the SA login works. Odd, it must me a bug in smsql 5.1x I hadn't tried R1 yet, but from your attempt it doesn't seem helpful.
If a bug report hasn't been opened with support I'll do that and post the bug ID here. Thought I'd see if it had been added first.
If anything from OS to firmware is an unsupported version it could be the cause of any issues you're seeing. Click on "Change" to the right of Storage Solution and select SnapManager for SQL, then enter all the relevant versions and check your compatibility.