If the client use the new InitialContext settings for EAP 7.1+ and do the lookup for a legacy EJB2 application the invocation is not possible if the $local configuration is removed or the server is on a different machine where the <local> authentication will not work.

A similar application using ejb3 application (same repository 'server' application) will work as expected.
It depends on the client server cobination which Exception can be seen

local client/server without the <local> element
INFO: JBoss EJB Client version 4.0.11.Final-redhat-1
org.jboss.ejb.client.RequestSendFailedException: EJBCLIENT000409: No more destinations are available
at org.jboss.ejb.client.EJBClientInvocationContext.getResult(EJBClientInvocationContext.java:592)
at org.jboss.ejb.client.EJBClientInvocationContext.getResult(EJBClientInvocationContext.java:528)
at org.jboss.ejb.protocol.remote.RemotingEJBClientInterceptor.handleInvocationResult(RemotingEJBClientInterceptor.java:56)
at org.jboss.ejb.client.EJBClientInvocationContext.getResult(EJBClientInvocationContext.java:594)
at org.jboss.ejb.client.EJBClientInvocationContext.getResult(EJBClientInvocationContext.java:528)
at org.jboss.ejb.client.TransactionPostDiscoveryInterceptor.handleInvocationResult(TransactionPostDiscoveryInterceptor.java:133)
at org.jboss.ejb.client.EJBClientInvocationContext.getResult(EJBClientInvocationContext.java:594)
at org.jboss.ejb.client.EJBClientInvocationContext.getResult(EJBClientInvocationContext.java:528)
at org.jboss.ejb.client.DiscoveryEJBClientInterceptor.handleInvocationResult(DiscoveryEJBClientInterceptor.java:114)
at org.jboss.ejb.client.EJBClientInvocationContext.getResult(EJBClientInvocationContext.java:594)
at org.jboss.ejb.client.EJBClientInvocationContext.getResult(EJBClientInvocationContext.java:528)
at org.jboss.ejb.client.NamingEJBClientInterceptor.handleInvocationResult(NamingEJBClientInterceptor.java:78)
at org.jboss.ejb.client.EJBClientInvocationContext.getResult(EJBClientInvocationContext.java:594)
at org.jboss.ejb.client.EJBClientInvocationContext.getResult(EJBClientInvocationContext.java:528)
at org.jboss.ejb.client.TransactionInterceptor.handleInvocationResult(TransactionInterceptor.java:172)
at org.jboss.ejb.client.EJBClientInvocationContext.getResult(EJBClientInvocationContext.java:594)
at org.jboss.ejb.client.EJBClientInvocationContext.getResult(EJBClientInvocationContext.java:528)
at org.jboss.ejb.client.EJBClientInvocationContext.awaitResponse(EJBClientInvocationContext.java:938)
at org.jboss.ejb.client.EJBInvocationHandler.invoke(EJBInvocationHandler.java:177)
at org.jboss.ejb.client.EJBInvocationHandler.invoke(EJBInvocationHandler.java:112)
at com.sun.proxy.$Proxy2.create(Unknown Source)
at org.jboss.wfink.eap71.playground.ejb2.client.SimpleInvocationTest.invoke(SimpleInvocationTest.java:48)
at org.jboss.wfink.eap71.playground.ejb2.client.SimpleInvocationTest.main(SimpleInvocationTest.java:84)
Suppressed: org.jboss.ejb.client.RequestSendFailedException
at org.jboss.ejb.protocol.remote.RemoteEJBReceiver$1.handleFailed(RemoteEJBReceiver.java:101)
at org.jboss.ejb.protocol.remote.RemoteEJBReceiver$1.handleFailed(RemoteEJBReceiver.java:74)
at org.xnio.IoFuture$HandlingNotifier.notify(IoFuture.java:215)
at org.xnio.AbstractIoFuture$NotifierRunnable.run(AbstractIoFuture.java:720)
at org.jboss.remoting3.EndpointImpl$TrackingExecutor.lambda$execute$0(EndpointImpl.java:949)
at java.util.concurrent.ThreadPoolExecutor.runWorker(ThreadPoolExecutor.java:1149)
at java.util.concurrent.ThreadPoolExecutor$Worker.run(ThreadPoolExecutor.java:624)
at java.lang.Thread.run(Thread.java:748)
Caused by: javax.security.sasl.SaslException: Authentication failed: none of the mechanisms presented by the server (DIGEST-MD5) are supported
at org.jboss.remoting3.remote.ClientConnectionOpenListener$Capabilities.handleEvent(ClientConnectionOpenListener.java:444)
at org.jboss.remoting3.remote.ClientConnectionOpenListener$Capabilities.handleEvent(ClientConnectionOpenListener.java:242)
at org.xnio.ChannelListeners.invokeChannelListener(ChannelListeners.java:92)
at org.xnio.conduits.ReadReadyHandler$ChannelListenerHandler.readReady(ReadReadyHandler.java:66)
at org.xnio.nio.NioSocketConduit.handleReady(NioSocketConduit.java:89)
at org.xnio.nio.WorkerThread.run(WorkerThread.java:591)
at ...asynchronous invocation...(Unknown Source)
at org.jboss.remoting3.EndpointImpl.connect(EndpointImpl.java:571)
at org.jboss.remoting3.EndpointImpl.connect(EndpointImpl.java:537)
at org.jboss.remoting3.ConnectionInfo$None.getConnection(ConnectionInfo.java:82)
at org.jboss.remoting3.ConnectionInfo.getConnection(ConnectionInfo.java:55)
at org.jboss.remoting3.EndpointImpl.doGetConnection(EndpointImpl.java:488)
at org.jboss.remoting3.EndpointImpl.getConnectedIdentity(EndpointImpl.java:434)
at org.jboss.remoting3.UncloseableEndpoint.getConnectedIdentity(UncloseableEndpoint.java:52)
at org.jboss.remoting3.Endpoint.getConnectedIdentity(Endpoint.java:123)
at org.jboss.ejb.protocol.remote.RemoteEJBReceiver.lambda$getConnection$2(RemoteEJBReceiver.java:185)
at java.security.AccessController.doPrivileged(Native Method)
at org.jboss.ejb.protocol.remote.RemoteEJBReceiver.getConnection(RemoteEJBReceiver.java:185)
at org.jboss.ejb.protocol.remote.RemoteEJBReceiver.processInvocation(RemoteEJBReceiver.java:128)
at org.jboss.ejb.client.EJBClientInvocationContext.sendRequest(EJBClientInvocationContext.java:479)
at org.jboss.ejb.protocol.remote.RemotingEJBClientInterceptor.handleInvocation(RemotingEJBClientInterceptor.java:51)
at org.jboss.ejb.client.EJBClientInvocationContext.sendRequest(EJBClientInvocationContext.java:491)
at org.jboss.ejb.client.TransactionPostDiscoveryInterceptor.handleInvocation(TransactionPostDiscoveryInterceptor.java:79)
at org.jboss.ejb.client.EJBClientInvocationContext.sendRequest(EJBClientInvocationContext.java:491)
at org.jboss.ejb.client.DiscoveryEJBClientInterceptor.handleInvocation(DiscoveryEJBClientInterceptor.java:91)
at org.jboss.ejb.client.EJBClientInvocationContext.sendRequest(EJBClientInvocationContext.java:491)
at org.jboss.ejb.client.NamingEJBClientInterceptor.handleInvocation(NamingEJBClientInterceptor.java:66)
at org.jboss.ejb.client.EJBClientInvocationContext.sendRequest(EJBClientInvocationContext.java:491)
at org.jboss.ejb.client.TransactionInterceptor.handleInvocation(TransactionInterceptor.java:165)
at org.jboss.ejb.client.EJBClientInvocationContext.sendRequest(EJBClientInvocationContext.java:491)
at org.wildfly.common.context.Contextual.runExConsumer(Contextual.java:203)
at org.jboss.ejb.client.EJBClientInvocationContext.sendRequestInitial(EJBClientInvocationContext.java:327)
at org.jboss.ejb.client.EJBInvocationHandler.invoke(EJBInvocationHandler.java:173)
at org.jboss.ejb.client.EJBInvocationHandler.invoke(EJBInvocationHandler.java:112)
at com.sun.proxy.$Proxy2.create(Unknown Source)
at org.jboss.wfink.eap71.playground.ejb2.client.SimpleInvocationTest.invoke(SimpleInvocationTest.java:48)
at org.jboss.wfink.eap71.playground.ejb2.client.SimpleInvocationTest.main(SimpleInvocationTest.java:84)

---- remote server

INFO: JBoss EJB Client version 4.0.11.Final-redhat-1
org.jboss.ejb.client.RequestSendFailedException: EJBCLIENT000409: No more destinations are available
at org.jboss.ejb.client.EJBClientInvocationContext.getResult(EJBClientInvocationContext.java:592)
at org.jboss.ejb.client.EJBClientInvocationContext.getResult(EJBClientInvocationContext.java:528)
at org.jboss.ejb.protocol.remote.RemotingEJBClientInterceptor.handleInvocationResult(RemotingEJBClientInterceptor.java:56)
at org.jboss.ejb.client.EJBClientInvocationContext.getResult(EJBClientInvocationContext.java:594)
at org.jboss.ejb.client.EJBClientInvocationContext.getResult(EJBClientInvocationContext.java:528)
at org.jboss.ejb.client.TransactionPostDiscoveryInterceptor.handleInvocationResult(TransactionPostDiscoveryInterceptor.java:133)
at org.jboss.ejb.client.EJBClientInvocationContext.getResult(EJBClientInvocationContext.java:594)
at org.jboss.ejb.client.EJBClientInvocationContext.getResult(EJBClientInvocationContext.java:528)
at org.jboss.ejb.client.DiscoveryEJBClientInterceptor.handleInvocationResult(DiscoveryEJBClientInterceptor.java:114)
at org.jboss.ejb.client.EJBClientInvocationContext.getResult(EJBClientInvocationContext.java:594)
at org.jboss.ejb.client.EJBClientInvocationContext.getResult(EJBClientInvocationContext.java:528)
at org.jboss.ejb.client.NamingEJBClientInterceptor.handleInvocationResult(NamingEJBClientInterceptor.java:78)
at org.jboss.ejb.client.EJBClientInvocationContext.getResult(EJBClientInvocationContext.java:594)
at org.jboss.ejb.client.EJBClientInvocationContext.getResult(EJBClientInvocationContext.java:528)
at org.jboss.ejb.client.TransactionInterceptor.handleInvocationResult(TransactionInterceptor.java:172)
at org.jboss.ejb.client.EJBClientInvocationContext.getResult(EJBClientInvocationContext.java:594)
at org.jboss.ejb.client.EJBClientInvocationContext.getResult(EJBClientInvocationContext.java:528)
at org.jboss.ejb.client.EJBClientInvocationContext.awaitResponse(EJBClientInvocationContext.java:938)
at org.jboss.ejb.client.EJBInvocationHandler.invoke(EJBInvocationHandler.java:177)
at org.jboss.ejb.client.EJBInvocationHandler.invoke(EJBInvocationHandler.java:112)
at com.sun.proxy.$Proxy2.create(Unknown Source)
at org.jboss.wfink.eap71.playground.ejb2.client.SimpleInvocationTest.invoke(SimpleInvocationTest.java:48)
at org.jboss.wfink.eap71.playground.ejb2.client.SimpleInvocationTest.main(SimpleInvocationTest.java:84)
Suppressed: org.jboss.ejb.client.RequestSendFailedException
at org.jboss.ejb.protocol.remote.RemoteEJBReceiver$1.handleFailed(RemoteEJBReceiver.java:101)
at org.jboss.ejb.protocol.remote.RemoteEJBReceiver$1.handleFailed(RemoteEJBReceiver.java:74)
at org.xnio.IoFuture$HandlingNotifier.notify(IoFuture.java:215)
at org.xnio.AbstractIoFuture$NotifierRunnable.run(AbstractIoFuture.java:720)
at org.jboss.remoting3.EndpointImpl$TrackingExecutor.lambda$execute$0(EndpointImpl.java:949)
at java.util.concurrent.ThreadPoolExecutor.runWorker(ThreadPoolExecutor.java:1149)
at java.util.concurrent.ThreadPoolExecutor$Worker.run(ThreadPoolExecutor.java:624)
at java.lang.Thread.run(Thread.java:748)
Caused by: javax.security.sasl.SaslException: Authentication failed: all available authentication mechanisms failed:
JBOSS-LOCAL-USER: javax.security.sasl.SaslException: ELY05128: [JBOSS-LOCAL-USER] Failed to read challenge file [Caused by java.io.FileNotFoundException: /data/srv/eap/7.2.0/ejb2/standalone/tmp/auth/local3280037296739979063.challenge (No such file or directory)]
at org.jboss.remoting3.remote.ClientConnectionOpenListener.allMechanismsFailed(ClientConnectionOpenListener.java:109)
at org.jboss.remoting3.remote.ClientConnectionOpenListener$Capabilities.handleEvent(ClientConnectionOpenListener.java:446)
at org.jboss.remoting3.remote.ClientConnectionOpenListener$Capabilities.handleEvent(ClientConnectionOpenListener.java:242)
at org.xnio.ChannelListeners.invokeChannelListener(ChannelListeners.java:92)
at org.xnio.conduits.ReadReadyHandler$ChannelListenerHandler.readReady(ReadReadyHandler.java:66)
at org.xnio.nio.NioSocketConduit.handleReady(NioSocketConduit.java:89)
at org.xnio.nio.WorkerThread.run(WorkerThread.java:591)
at ...asynchronous invocation...(Unknown Source)
at org.jboss.remoting3.EndpointImpl.connect(EndpointImpl.java:571)
at org.jboss.remoting3.EndpointImpl.connect(EndpointImpl.java:537)
at org.jboss.remoting3.ConnectionInfo$None.getConnection(ConnectionInfo.java:82)
at org.jboss.remoting3.ConnectionInfo.getConnection(ConnectionInfo.java:55)
at org.jboss.remoting3.EndpointImpl.doGetConnection(EndpointImpl.java:488)
at org.jboss.remoting3.EndpointImpl.getConnectedIdentity(EndpointImpl.java:434)
at org.jboss.remoting3.UncloseableEndpoint.getConnectedIdentity(UncloseableEndpoint.java:52)
at org.jboss.remoting3.Endpoint.getConnectedIdentity(Endpoint.java:123)
at org.jboss.ejb.protocol.remote.RemoteEJBReceiver.lambda$getConnection$2(RemoteEJBReceiver.java:185)
at java.security.AccessController.doPrivileged(Native Method)
at org.jboss.ejb.protocol.remote.RemoteEJBReceiver.getConnection(RemoteEJBReceiver.java:185)
at org.jboss.ejb.protocol.remote.RemoteEJBReceiver.processInvocation(RemoteEJBReceiver.java:128)
at org.jboss.ejb.client.EJBClientInvocationContext.sendRequest(EJBClientInvocationContext.java:479)
at org.jboss.ejb.protocol.remote.RemotingEJBClientInterceptor.handleInvocation(RemotingEJBClientInterceptor.java:51)
at org.jboss.ejb.client.EJBClientInvocationContext.sendRequest(EJBClientInvocationContext.java:491)
at org.jboss.ejb.client.TransactionPostDiscoveryInterceptor.handleInvocation(TransactionPostDiscoveryInterceptor.java:79)
at org.jboss.ejb.client.EJBClientInvocationContext.sendRequest(EJBClientInvocationContext.java:491)
at org.jboss.ejb.client.DiscoveryEJBClientInterceptor.handleInvocation(DiscoveryEJBClientInterceptor.java:91)
at org.jboss.ejb.client.EJBClientInvocationContext.sendRequest(EJBClientInvocationContext.java:491)
at org.jboss.ejb.client.NamingEJBClientInterceptor.handleInvocation(NamingEJBClientInterceptor.java:66)
at org.jboss.ejb.client.EJBClientInvocationContext.sendRequest(EJBClientInvocationContext.java:491)
at org.jboss.ejb.client.TransactionInterceptor.handleInvocation(TransactionInterceptor.java:165)
at org.jboss.ejb.client.EJBClientInvocationContext.sendRequest(EJBClientInvocationContext.java:491)
at org.wildfly.common.context.Contextual.runExConsumer(Contextual.java:203)
at org.jboss.ejb.client.EJBClientInvocationContext.sendRequestInitial(EJBClientInvocationContext.java:327)
at org.jboss.ejb.client.EJBInvocationHandler.invoke(EJBInvocationHandler.java:173)
at org.jboss.ejb.client.EJBInvocationHandler.invoke(EJBInvocationHandler.java:112)
at com.sun.proxy.$Proxy2.create(Unknown Source)
at org.jboss.wfink.eap71.playground.ejb2.client.SimpleInvocationTest.invoke(SimpleInvocationTest.java:48)
at org.jboss.wfink.eap71.playground.ejb2.client.SimpleInvocationTest.main(SimpleInvocationTest.java:84)
Suppressed: javax.security.sasl.SaslException: ELY05128: [JBOSS-LOCAL-USER] Failed to read challenge file [Caused by java.io.FileNotFoundException: /data/srv/eap/7.2.0/ejb2/standalone/tmp/auth/local3280037296739979063.challenge (No such file or directory)]
at org.wildfly.security.sasl.localuser.LocalUserClient.evaluateMessage(LocalUserClient.java:107)
at org.wildfly.security.sasl.util.AbstractSaslParticipant.evaluateMessage(AbstractSaslParticipant.java:180)
at org.wildfly.security.sasl.util.AbstractSaslClient.evaluateChallenge(AbstractSaslClient.java:59)
at org.wildfly.security.sasl.util.AbstractDelegatingSaslClient.evaluateChallenge(AbstractDelegatingSaslClient.java:54)
at org.wildfly.security.sasl.util.PrivilegedSaslClient.lambda$evaluateChallenge$0(PrivilegedSaslClient.java:55)
at java.security.AccessController.doPrivileged(Native Method)
at org.wildfly.security.sasl.util.PrivilegedSaslClient.evaluateChallenge(PrivilegedSaslClient.java:55)
at org.jboss.remoting3.remote.ClientConnectionOpenListener$Authentication.lambda$handleEvent$0(ClientConnectionOpenListener.java:650)
at org.jboss.remoting3.EndpointImpl$TrackingExecutor.lambda$execute$0(EndpointImpl.java:949)
at java.util.concurrent.ThreadPoolExecutor.runWorker(ThreadPoolExecutor.java:1149)
at java.util.concurrent.ThreadPoolExecutor$Worker.run(ThreadPoolExecutor.java:624)
at java.lang.Thread.run(Thread.java:748)
Caused by: java.io.FileNotFoundException: /data/srv/eap/7.2.0/ejb2/standalone/tmp/auth/local3280037296739979063.challenge (No such file or directory)
at java.io.FileInputStream.open0(Native Method)
at java.io.FileInputStream.open(FileInputStream.java:195)
at java.io.FileInputStream.<init>(FileInputStream.java:138)
at org.wildfly.security.sasl.localuser.LocalUserClient.evaluateMessage(LocalUserClient.java:93)
... 11 more