each domain is run under a specific user and cannot access files of another user. if you want to use the second user you created to manage the domain name you need to edit the domain and select the other user for it. if you cannot log in with the first user account apparently something is wrong. go to manage users and change the password for it. be advised it can take more than 5 minutes for the change to kick in.
also when/if you change the setting to have the domain run under your second user, the files are just copied over. this means that the first user will still have the domain folder but if you edit files in it, it will not show up on the web. you would have to edit the files under the second user since you changed it. you may as well delete the folder from the first user if you do switch.