I have encountered yet another issue while configuring TFS LAB standard environment and though it would help some one if I explain how did I resolve it.
The error happens in verify step of lab configuration and it is giving "Verify that the machines are accessible using the user name and password provided". Lucky for me this time I do not have to explain much all is well explained here thanks to Subramanyam [MSFT].
The next related error "The agent can connect to the controller but the controller cannot connect to the agent" is explained in my blog post.
The fixes are valid for joining Standard machines to TFS LAB environment, from not trusted domains or work-group.