Workstations losing connection to all services on SBS server after reboot

Server Specs:

Domain Controller is Small Business Server 2003 SP2, updated with all current hotfixes.
dual 3.2GHz, 2.0 GB RAM, plenty of available disk on all logical disks.

Active Directory Specs:
~20 users
~15 workstations
no additional member servers or domain controllers

Symptoms:

This morning users were not able to access any server resources and were receiving "Access is denied" after attempting to access drives mapped from the SBS.   Alternatively, some users get a username/password request dialog, however entering proper credentials doesn't allow access.  Logon script processing never happens during logon.  Users cannot access any shared drives, network printers, or email -- i.e. any services located on the SBS.

Event Viewer on Server has a LOT of 538, 540, and 576 logging in Security Logs every second.  These information events follow:

Event Type:      Success Audit
Event Source:      Security
Event Category:      Logon/Logoff
Event ID:      538
Date:            4/25/2008
Time:            7:14:11 AM
User:            NT AUTHORITY\SYSTEM
Computer:      server
Description:
User Logoff:
       User Name:      server$
       Domain:            domain
       Logon ID:            (0x0,0x2583CAC6)
       Logon Type:      3


Event Type:      Success Audit
Event Source:      Security
Event Category:      Logon/Logoff
Event ID:      576
Date:            4/25/2008
Time:            7:14:11 AM
User:            NT AUTHORITY\SYSTEM
Computer:      server
Description:
Special privileges assigned to new logon:
       User Name:      server$
       Domain:            domain
       Logon ID:            (0x0,0x2583CB83)
       Privileges:      SeSecurityPrivilege
                  SeBackupPrivilege
                  SeRestorePrivilege
                  SeTakeOwnershipPrivilege
                  SeDebugPrivilege
                  SeSystemEnvironmentPrivilege
                  SeLoadDriverPrivilege
                  SeImpersonatePrivilege
                  SeEnableDelegationPrivilege



Event Type:      Success Audit
Event Source:      Security
Event Category:      Logon/Logoff
Event ID:      540
Date:            4/24/2008
Time:            4:14:11 PM
User:            NT AUTHORITY\SYSTEM
Computer:      server
Description:
Successful Network Logon:
       User Name:  server$
       Domain:            domain
       Logon ID:            (0x0,0x2583CB83)
       Logon Type:      3
       Logon Process:      Kerberos
       Authentication Package:      Kerberos
       Workstation Name:      
       Logon GUID:      {24c78def-3419-0054-4395-9a1f4ede0cd7}
       Caller User Name:      -
       Caller Domain:      -
       Caller Logon ID:      -
       Caller Process ID: -
       Transited Services: -
       Source Network Address:      192.168.1.2
       Source Port:      49878






Workstations report Application Error Event 1058 from Source Userenv:

Event Type:      Error
Event Source:      Userenv
Event Category:      None
Event ID:      1058
Date:            4/25/2008
Time:            7:09:10 AM
User:            user\domain
Computer:      computername
Description:
Windows cannot access the file gpt.ini for GPO cn={E08C8491-B61A-4987-B658-683D99CF8F44},cn=policies,cn=system,DC=domain,DC=local. The file must be present at the location <\\domain.local\SysVol\domain.local\Policies\{E08C8491-B61A-4987-B658-683D99CF8F44}\gpt.ini>. (Access is denied. ). Group Policy processing aborted.



Troubleshooting steps taken:
-Restarting Server and workstations:  unsuccessful.
-Resetting computer account in AD and rejoining domain: limited success.  The users can then access services, however after an additional workstation restart, the same symptoms as above occur.
-Complete removal of workstation from domain.  Rename workstation and rejoin domain: limited success with same result as resetting account.
-dcdiag passes all tests

This seems to be some issue with AD and user/computer credentials.  Not sure where to go from here.
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