Profile error on Windows Server 2008

I recently setup a windows 2008 Terminal Server.  I connected fine and another person connected successfully.  I then received a complaint that a third user could not logon.  It would hang on his profile when he tried to connect.   I looked at the event log and found the following message in the Application log

Windows cannot load the locally stored profile. Possible causes of this error include insufficient security rights or a corrupt local profile.

 DETAIL - The configuration registry database is corrupt.

Log Name: Application
Source:      User Profile Service
Event ID: 1502
Level: Error
User: MyDomain\Fred
OpCode: Info
Task Category: None
Keywords: Classic
Computer: s3.MyDomain.local

I checked another Terminal Server running Windows Server 2008 and I could not find the error in the logs.

This is a new installation which I just added to the domain this past Thursday.  Both users who have tested this server generate the error in the Application log but one hangs and the other can log on successfully.  When I logon with a local profile I generate no errors.  

I checked the settings for the users and their default profile and personal folder are set in their user settings to a separate server.  

Is there a way to resolve this issue without starting over?

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"According To Microsoft:"
This error can occur if the user profile registry hive gets corrupted or if permissions are set incorrectly on the profile folders.

User Action:
To troubleshoot this problem, try the following:
1. Review the Event Viewer logs and look for related profile (userenv) events to obtain additional details about this error.
2. If the user profile registry hive (ntuser.dat, the user profile registry hives supporting file) is corrupted, replace ntuser.dat with a backup copy of this file.
3. Verify that permissions are set correctly on the local user profile folders. On a computer that has a clean installation (with no previous operating system) of Windows Server 2003, Windows XP, or Windows 2000 operating system, the user profile folders are stored in system_drive\Documents and Settings; for example, C:\Documents and Settings.

follow this link:
qvfpsAuthor Commented:
The error is generated when using remote profiles.   Both users who have tested this server have their profiles stored on a remote server and the path is set under Active Directery users/ and omputers.   The one user who has a local profile only logs on with no issues and no errors in the logs.  

It should not be a permissions error on the profile folder since they have been using this setup to connect to two other Terminal Servers one running Windows Server 2003 and one running Windows Server 2008.  I have checked the logs on the  current Windows 2003 server and the WIndows 2008 server and I do not find the error in the application logs.  
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set permissions full control in the remote profiles folder
qvfpsAuthor Commented:
The permissions on the remote profile folder are currently set to full
qvfpsAuthor Commented:
The answers were helpful in checking permissions but the problem was the profiles being stored on a remote server
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