Can't create new user profiles Windows 7 Pro upgrade

If the answer is "reinstall Windows 7" I can understand.  But, hope springs eternal:

This has happened on more than one Windows 7 computer that came as an XP "downgrade".  After Windows 7 is installed, the user accounts go haywire.
One is NOT able to create a new user profile.
Unfortunately, I didn't do the Win 7 install so I can't vouch for the exact steps taken.

Today I was working on one of these and discovered:
1) There are multiple login icons that would show at times - for example after having used and logged out from Remote Desktop as usual.  
2) The primary user's password was supposed to be established (i.e. nonblank) but is apparently blank as "Create a password" shows up in Control Panel / User Accounts for this account.
2) I tried to login using Windows Remote Desktop and NO password worked.  Not the recorded one and not [blank].
3) We tried to set up a new user profile locally and all that shows up is a blank dialog window.  No options to select, etc.
4) I could log in with "adm" user and our password for that one using Remote Desktop.

It would be nice to know how to just fix this without reinstalling Windows.