Cannot Add/Connect to Printer

Check The security policy applied to the system (either local or Domain) for the following settings:

user Configuration > Administrative Templates > Control panel > printers

Make sure you are not prevent users form adding printers on the system by this policy setting.

is a problem with windows server local security setting, there is a microsoft help page about it:
http://support.microsoft.com/kb/259937

If it has been working for years then it could be some environmental change in the system that could be causing this. Shot in the dark, but have you deleted the drivers and re-added them in the print server properties. The fact that you are still getting this error when logged in as admin, I am just guessing at driver corruption. What system updates have been applied around the same time this symptom started to present? Are there any events in the event log that point to anything relating to your issues? Can you remove and add this printer to other PC’s on the network?  Is it this one system only that is having this issue? Have you added or removed any networking components since this occurrence?

The funny thing is if i go to a different computer and log on as the user having the problem the printers connect with no issues. I have narrowed it down to be a computer issue but not sure why it would happen to certain users...i need to check windows updates and see if that is it.  Also i verified again as a local admin i can manually connect to printer, but logon script does not work.  I am thinking there is some kind of trust issue between the client computers and the dc's, but i have unjoined and rejoined the domain and nothing changed. I have not added or removed any netoworking components, and it is happening to as far as i know about 15 users where it only connects there default printer.
logon-script.JPG

If you had installed any new programs to the machine recently, then try to restore back the machine to a previous state.
It may help.

Problem also could be due to malware, virus.
Run your anti virus and make sure machine is free from virus.

What about your LMHOST file? Has there been any manual entries by any chance?

net use /persistent:yes is default settings for NT and win2000/XP. If you have mapped some network drives and check the reconnect at logon, or your network uses logon script to map network drives, the mapped network drives may show red Xs. If you enable echo and pause the logon script or if using net use to map the same drive manually, you may get "System error 85 has occurred. The local device name is already in use." One thing you may want to try is using net use /persistent:no, for example, net use i: \\servername\folder /persistent:no.

I resolved the issue