Problem solved.
The problem was that although the user fields in both Moodle systems, including customs fields, were the same, there was a field in SystemB that was required but was not required in SystemA. So when a user tried to login into SystemB from SystemA via Mnet, they were met with the 'Your user account is incomplete' error message.
I didn't notice the cause of the error quicker because until a few weeks ago students were able to login to SystemB via Mnet without problem. It seems that the user filed in question was made required very recently and so then prevented users from logging into SystenB. The lesson in all this is to check the obvious things first .