I add the user, and

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Hi sathiamat428,

The password does not meet password policy requirements because it is not complex enough.
You have to turn off password complexity so that the Control Panel is able to work if people add users with insufficiently complex passwords. To do this access "administrative tools" - "Local (Domain) Security Policy", then in this area, access "Account policies" - "Password Policy" and disable the password complexity check.

Or use a complex enough password?

It's probably best advice, though, not to modify your policy settings too much.. Try using a mixture of alphabetic, numeric and special characters. That'll keep the password within the domain policy's defined parameters, and you'll be able to get on with what you are doing! :)
Good Luck

Chris (ziraffa)