I didn't do the create database part but testing the Powershell from your OP works for me with only one change.

I hardcoded the DefaultDatabase for both logins to msdb. I initially had $Database = 'bkTest' but that database only existed on 2 of the 3 servers I was testing against. If the database you're setting as default doesn't exist you'll get that create() error.

Are you waiting to add the logins until after creating the databases?