Group Policy Client Service failed login

My sister's brand new Dell (3 mos old) has Vista. This week, after an
automatic Windows Update, she cannot log in to her Vista account. She
gets an error pop-up that says "*group policy client service failed
login*." I searched the internet and, while not really finding a
solution, I did see several discussions of this dating back several
months. I learned it was actually a problem with that particular User
Account.

In this case, she had only one. So I rebooted into Safe Mode and
created another User Account with Administration privileges. Sure
enough, we can get into Windows using the newly created account, but
It's almost like a new machine: All her emails, email account settings,
browser bookmarks, installed programs, etc. are gone! (Although her
pictures are still in the My Pictures folder! That and the installed
printers are about the only vestige of the other User Account to be
found.)

*Get this*: called Microsoft. They will not help her because being
unable to login makes it "a password problem;" a security issue. They
have no way of knowing whether or not she is attempting to "break into"
someone's Windows machine!! (Technically, it is NOT a password issue;
she enters the correct password to get into the User Account, then gets
the "group policy" error. This is different than a Password error...I
know, because we purposely put in an incorrect password, and only then
did we actually get a Password Error pop-up box. When the correct
password is entered she gets the "group policy" error.)

Anyone here familiar with this? Although, technically she can use her
computer now, she has to start from scratch and configure Windows Mail,
Firefox, etc. Of course, she has lost months worth of emails.

Tnx,
Rag


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ragtag