Have you tried to do it via computer management?
Right click on 'My computer'
Select 'Manage'
Expand Local 'Users and Groups'
Select 'Users'
In the list of users, below the last one right click and select 'new user'
Add the user.
It should only really come up with the error you are stating if you are trying to add a domain user to a domain group, and the domain is listed as the location, and not the local machine.
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by: thinkpads_userPosted on 2009-07-20 at 15:36:33ID: 24899748
If it is a domain-connected machine, then it has a three line login: userid, password and domain/computer name dropdown. Is this what you see? Then are you logging into the local machine (computer name in the dropdown)? You need to do this to create a local user account.
... Thinkpads_User