I got it

; http://php.net/session.hash-function
session.hash_function = sha512

I compared the other test server and it was

; http://php.net/session.hash-function
session.hash_function = 1

I changed it to 1 and immediately, the admin worked after I restarted the web server. But I still have no idea why I cannot use localhost in the setup. hmmm
Any ideas?