Only members of the Administrator group can log on

I am trying to create a new user named "Shop" with a password of "SHOP" who would be a member of the group "users" on a stand alone XP SP3 machine. I have created and deleted this user several times both using the control panel User Accounts icon, and the local users and groups under Computer Management. After creating the user, when I log off as Administrator and log back on as Shop, Windows thinks about it for 30 seconds or so, and then loops back to the "press ctl-alt-del to login" window. If I change Shop to an Administrator, I can log on with no issues. If I log off and change Shop back to the "Users" group, I get the login loop. I tried Local Security Policy - Log on Locally Properties, and added Shop to list under Local Security Setting. It now lists Administrators, Backup Operators, Guest, Power Users, Users, and Shop. This did not seem to change anything. I am still stuck. Only members of the Administrators group can log on to this PC. What am I missing?
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Log in as an Administrator.
Go to the Control Panel, Administrative Tools, Local Security Policy.
Select Local Policies, User Rights Assignment.
On the right hand side you can scroll down and find 'Log on Locally'.
Open this and make sure it has Users and Power Users. It llikely only will have Administrators.
Hope this Helps!
DJKOEPNICKAuthor Commented:
I had already looked there. It had Administrators, Backup Operators, Guest, Power Users and Users. I added my new account "Shop" to the list, rebooted and it did not change anything. When I logged on as "Shop" I still was in the same loop. It acts like it is going to log on, and then the "Logging Off" window flashes and I am back at the "Press Ctrl-Alt-Delete to begin" window.
DJKOEPNICKAuthor Commented:
This problem is more complex than I originally thought.
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I have nothing left, I tried doing some research online and it and I cannot find anything remotely similar to this problem. Sorry :/   It is a pain, but you could always repair install or backup your data format and reload the machine.
May sound silly but have you tried a different user name?  
DJKOEPNICKAuthor Commented:
Yes, I have tried several. I have created them both from the Control Panel - User Accounts, and from Computer Management - Local Users and Groups - Users,
Results are the same - unless I make them administrators they can't logon.
DJKOEPNICKAuthor Commented:
I needed to get this PC in use, so I have given up trying to fix the issues. I used the Dell system CD to reformat the C drive and reinstalled Windows XP.  It takes about 3 to 4 hours to set up a brand new PC with all the stuff necessary to function on our factory floor. I hated to give up, but sometimes you can spend way more time trying fix something than you would spend reformatting and reloading the software.

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Windows XP

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