Hello,
Since its a poc setup, all servers are in same L2 network with no firewall in between three servers
Are you sure that all the ports are open from the computer where Adaxes service is installed towards the domain controllers of the domain you are failing to register?
I below screenshot Domain A = iamcloud.local Domain B = idcloud.local
When the username and password are actually correct (you can use them to sign in to AD), the only option for the error to occur is something blocking the authentication. It can be firewall or some protaction software in your environment. There is just nothing in Adaxes that can cause such a thing.