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Active Desktop Error Windows 2003 XP clients

Hello.
Currently I am running a windows 2003 AD domain with XP clients. When some users log on they recieve an active desktop error. The active desktop settings as defined in group policy does not come up the users have a desktop with a thick blue bar in the background. I have reprofiled users and deleted the local user profile from the client machine. In some intances this has worked for some time.

Could this be an issue with IE7? Any suggestions for a fix would be appreciated

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lobo797
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Mattywerts

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Thanks for the point in the right direction