Couldn't see this mentioned anywhere on the forum, so thought I'd post it to inform mods of the problem, and hopefully it will be fixed soon.
Is your sis-in-law with orange broadband by any chance?
If so,tell here to try after 12.30am........I wish i was jokin'
I am having the exact same problem. My girlfriend is trying to create her account on the same ps3 that I have mine setup on. Mine is working fine and even the internet and Life work on her login. I am on Virgin BB.
What the heck?
Get her to come here on the forums and create psn handle here once she has done that.
Log in to the ps3 create account and select the bottom option all she needs to do is enter email and password.
And her account will be created