Windows XP home suddenly prompting for Windows login - how can I bypass?

I have a Dell Dimension 5150. Last week it suddenly started asking me for Windows login information. Prior to this it just booted without any prompting. I have tried administrator with no password and with various other passwords I might have set a long time (if in fact I ever did set a password) but I always get the error message "The local policy of this system does not permit you to logon interactively".
When I google around a bit, this message seems to be related to Remote Desktop but I have never used remote desktop and the OS is Windows XP Home which I don't think supports remote desktop anyway.

Things I have tried:
- ctrl-alt-del twice to enter administrator as username and various guesses at password including blank
- booting in safe mode ... this just results in getting to the same point where I am prompted for a windows login
- I changed the boot order in BIOS to boot from CD and I reinserted the orginal XP home disc but again this just results in getting me to the same point - i.e. I am prompted to login.
I have Norton Utilities which I also tried but I couldn't do anything useful with it either.
Any suggestions anyone?
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DukeLamontyAuthor Commented:
Hi again Pzozulka, I think I am forced to accept defeat on this problem. I tried your suggestion on repairing windows and using shift F10 at the installing devices step. nusmgr.cpl did then bring up the User Accounts Window but when I tried to change any user accounts I got the message "current user account is not recognized" and the system hung. However, I was impressed with your knowledge of this way of getting access which I suspect normally works. I have tried various solutions that normally work for this type of problem but none are working so I think I have a unique new variant of the problem. It's a Dell PC with its own Dell OEM Windows XP home installation. Nobody owned it other than me so I know that there were never any funny or illegal windows installation on it. The only recent configuration change was that I upgraded the memory from 1G to 2G but it was booting normally for a while after this before my current problem arose.
In addition to your suggestion on the repair method above, the most promising of the other methods I tried was pnordahls ntpasswd/bootdisk. This allowed me to go in using a command prompt to list and then change all user passwords and to successfully save the changes. When I did this my error message on logon with a blank administrator password changed to "unable to log you on because of an a/c restriction". If you google this microsoft knowledge base tells you you have to start in safe mode and you can get around it but guess what ... it doesn't work on my system. All of the error messages seem to relate to remote desktop so I think the Windows installation is just screwed and screwed in a way that I can't repair. I also tried the ultimate boot CD but when I tried the password changer on it, it runs through a series of checks and information dumping and then it reports an error and the system hangs.
My plan now is to simply buy an additional SATA disk and make it my new primary disk and boot from it using the old disk as a 2nd disk. I already have most of the data on the 2nd disk backed up so even if I can't read it it's not the end of the world but I do expect to be able to read it. When I read it off, I'll reformat the 2nd disk. I think I've spent about 10 hours on this already. A new disk is about $80 (European pricing). If I divide the cost of the disk by hours spent, the economics of continuing to try to recover don't make sens .... but do any economics make sense any more anyway !!! :)
Many thanks for your time and suggestions. I really appreciate it.
Control Panel > User Accounts > Change User Logon Type > Uncheck everything.
Start > Run > "regedit" (type that without the quotation marks).

Browse to: [HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows NT\CurrentVersion\Winlogon]
Set AutoAdminLogon = 1
Create a string key called "DefaultPassword".
Set Default Password = "your password".
DukeLamontyAuthor Commented:
Thanks pzozulka but the problem is I can't get as far as the control panel. I need to get past the windows login to be able to access the Control Panel !  
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Try these steps:
A. Boot using Windows XP Setup CD and follow the instruction like Accepting EULA, etc.
B. When it asks to repair your existing Windows installation, accept it and press R to run the repair.
C. Setup will start repairing your Windows and will start copying files, etc.
D. After a few minutes setup will restart your system and when it restarts dont press any key when it shows Press any key to continue& otherwise Setup will start from the beginning. Dont press any key and setup will resume where it left.
E. Now itll start doing other tasks and will show a small progressbar with a few details in left side.
F. Look carefully at the details and when it shows Installing devices, press <Shift>+F10 keys in your keyboard.
G. Itll open a Command Prompt window. Now type nusrmgr.cpl and press <Enter>.
H. Itll open the same User Accounts window which you see in Control Panel.
I. Now you can remove or reset any account password without any problem.

If that does not work, check this out:
DukeLamontyAuthor Commented:
Thanks Pzozulka. Will try this this evening when I get home. In the event that for some reason it doesn't work, have you any suggestions on using ultimatebootcd ? I looked at the link and there seem to be a whole series of applications/utilities on it - were you thinking of one in particular?
One other approach I was thinking of was using a Knoppix Linux CD where there seems to be a method of modifying windows passwords by adding chntpw to the Knoppix build ... I'm not sure how to do this yet but I suspect I'll figure it out. This is my fallback scenario.
I worked with Linux before, but on a trial basis, so I'm not too familiar withit. As far as ulitmatebootcd, just download the iso and burn to a cd. The CD will startup at boot time, launch the Password Recovery tool, don't remember what its called.
Thanks for reporting back, it looks like you got your next steps of procedure all figured out. That's exactly what I was going to recommend next. To buy another disk and make it your primary boot disk, so that you can recover all your data from the old disk.

Good Luck
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