I'm running into what seems to be a similar problem. While we don't use smart cards I likewise followed the instructions but cannot get the login to work.
What is interesting is that if I remote desktop into the server where NPrinting is installed I am able there to use AD to login.
I'm going to raise a support ticket. I'll let you know if we solve what seems to be a similar problem.
We also had difficulties trying to use AD. Users log in on their computer via domain "ABC". We have a diferent domain "DEF" via which we wanted to give users access to the application. Somehow it doesn't work if we want to authenticate via the "DEF" domain. If I change the domain to "ABC" we can successfully login using the domain credentials. It seems that the entered domain in the Windows Logon popup is never passed to the application.
Somehow it doesn't work as I would expect, or could there be another problem at the base of this?