Some users reported me that the useradd command creates sometimes 530 error because of the password, so i advice you to re-create the users using the GUI tools (system > administration > user & group), you could try also this command it worked for some users :
and then type the password you want to set for userftp again and do the same for your other user, it will just re-create the password.
sudo passwd userftp
However when i have a look in your proftpd.conf file there is a problem, do you really want 2 different users for your ftp server ? if yes you should modify those lines like that :
Why useralias ?
# Choose here the user alias you want !!!!
UserAlias user1 userftp
UserAlias user2 student
I use useralias in my guide because this tip prevents telnet access to your FTP server and therefore increase the security of your server.
So you always use the alias name to login your server even if the users is called userftp.
Feel free to require more details/help