Thank you Steffen Kaiser. I enabled the auth_debug and saw this error for permissions:

Aug 22 13:41:44 managesieve($u): Error: sieve-storage: Creating symlink() /home/$u/.dovecot.sieve to sieve/Out of office.sieve failed: Permission denied

The user's home directory was owned by root.

Can not explain it why it was so.

Thanks again!

On Wed, 21 Aug 2013, Joe Lourenco wrote:

...

roundcube: S: NO (TRYLATER) "Internal error occured. Refer to server log for more information. [2013-08-21 19:01:13]"

...

Nothing is showing up on the server log.

Check out Dovecot's error log and search for that timestamp of the message, it is there - unless, say, an out of disk error prevented the logging.