Did a search on this forum but did not find anything similar to my problem, so here goes;

I did setup a demo server, starts ok.
Server appearing in serverlist ok.
Local users login ok.
Remote users login ok.
The local users/players visible to everyone, ok.

Problem;
The remote users can see the local users but are invisible! They can't see each other and the local users can't see them.

Is this a router/firewall problem ? (Strange, since login is ok...)

Well, afterall it was a router setting.

The UDP positioning packets from LFS was somehow stopped by the Denials of Service (DoS) protection agent in the router. Some hours of investigation and trial lead to success, the server now up and running.

So if You have similar effects when running a LFS server, check if Your router does have DoS protection turned on.