Hello Bruce,
Yes, that's correct behavior.
- When you set "Auth server" as 'Manage Authentication", only AD users will be able to login. ( Why? because local "admin" user is _not_ in backend AD server ). You can add one AD backend user in [Gluu Admin Group](https://www.gluu.org/docs/gluu-server/4.4/user-management/local-user-management/#manage-groups-in-oxtrust), so that user can have administrative privilege.
- When you set "Local" as "Manage Authentication", only local user will be able to login, no AD users.
If you want to use both users, then you can use a custom script called [Multi_Login](https://github.com/GluuFederation/oxAuth/tree/master/Server/integrations/basic.multi_auth_conf).