I removed the “Home folder Encryption” option, verified new files get stored unencrypted, tried new federated shares but the problem persists (log file hammered with errors, no shares actually work).
So I am assuming this problem is with the Encryption module (not the federated sharing). The only way I can prove this theory is to do complete re-installs of both servers, refrain from enabling the encryption at all, and try again.
Unless someone can confirm that 11.1 can handle federated shares (could save me some time). Tx