I can't reproduce your results.
Have you used the webUI to create the new user account Setup->Users? Have you specified the same "nick name" as the "Full name" there? If not, you should login using the "nickname" -- that's the linux user name, read the tooltip.
I have created a user with TestAccount as full name and TestAccount as nick name and Password123, then:
jcard@silver:~> ftp dns-325
Connected to dns-325.homenet.
220 (vsFTPd 3.0.3)
Name (dns-325:foobar): TestAccount
331 Please specify the password.
Password:
230 Login successful.
Remote system type is UNIX.
Using binary mode to transfer files.
ftp> pwd
Remote directory: /mnt/md1/Users/TestAccount
ftp>
and the ftp server entry in the System Log (System->Utilities, View Logs) says:
Sep 18 17:37:17 DNS-325 ftp.info vsftpd[1964]: [TestAccount] OK LOGIN: Client "192.168.1.115"