No, that wouldn't be the cause for the following reasons.
1. If I had inadvertently created another account with a typo, I would have been able to create a toon in that account. Since it never logs in, you can't make a toon.
2. If an account is created, then that account shows up in your file system. In my case, that would be My Documents\EA Games\Iltima Online Legacy\User Data. My other three accounts are there and are functioning fine.
3. The Demise rules say you are limited to four accounts - I have 3 so far and cannot create the fourth.
So, still looking for something here.