I installed the production version and updated it to 5.0.43. I have narrowed the problem down to the following.
1) The system has Nvidia GPU. On a fresh install, Ubuntu 14.04 will load Nouveau driver. Everything works fine with this driver. I am able to create virtual desktops.
2) When I install the Nvidia Drivers the NoMachine Virtual Desktop creating stops. The connection is reset within a couple seconds without any error indication on the client side. It goes back to “Connect” screen on the client.
The behavior is repeatable by removing and installing nvidia driver.