Generally the first thing I check - when I start getting login errors - is that the correct permissions are setup on the App_Data directory.
If you are publishing it to Windows 2000 then the user ASP.NET needs full control over the directory, if it's windows 2003 then NETWORK SERVICE needs full control over the directory.
The issue arises because the database tracks last login (as an update query) so when it tries to write that field, and fails - it denies the user from logging in.
Post back and let us know where you end up. :)