Hi Andy,
A User Logon Request Is Rejected Without Any Messages
http://support.microsoft.com/?kbid=313322
If the above is not the case, this does work and has been verified:
The problem turned out to be that the Winlogon userinit entry was set to
"wsupdater.exe," and not "userinit.exe,".
Verified by Rick Lewis:
Place your XP CD in and navigate to the Recovery Console.
Change the C:\Windows prompt to: C:\Windows\System32 and copy userinit.exe
to wsaupdater.exe
Reboot into Safe Mode and modify:
change userinit in HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows
NT\CurrentVersion\Winlogon from wsaupdater.exe, to userinit.exe,
Added info:
Recovering XP using the Recover Console (Line 333) Right hand side:
http://www.kellys-korner-xp.com/xp_tweaks.htm
Good luck and keep us posted.