The first person in can enter the lobby with no problems, the second person waits an eternity with the bar going back and forth, then he gets either Connection Lost or occasionally, he gets into the lobby, but can't see the other person. If one person starts a game, the other can usually see the game, but can't join it. We've gotten various errors for why not, but the long wait with the pulsing bar followed by connection lost is the most common.

That is all with LAN games, we also tried connecting via the internet, and couldn't connect to each other's game there either.