I realise it’s been a while since the last post in this topic, but it pops up in searches and I wanted to leave a resolution here for future travellers.
I maintain the NativeAuthenticator and this 500 error is a pretty popular one. In all instances known to me it was always a problem with the machine that was running JupyterHub not having an account for the account in question. They don’t need to be admins on the machine, but they need an account (with a home directory for their files and such).
You can either add them all manually or add a snippet to the configuration file that automatically creates them when they log in (linked at the end of this entry).