Start menu gone with black background after logon

I have an issue with a single computer with xp sp3 and internet explorer 8. The reason is because we need to migrate to ie8 so that our software is compatible with our clients needs.

In my test environment we used a 2008 sever but we have a 2003 server in our live environment.

The issue:

When I log onto the machine, the background turns blacks and the start menu is gone. We have the same gpo's in our lab environment and this does not seem to happen. However, our software dialog still appears as it's suppose to upon logging on to the machine.

Is it possible that the IE8 gpo settings might be causing this?

Feel free to ask any questions in order to provide more details.

Thanks,

t