This error may occur on your NT 4.0 workstation if you (or your group) does NOT have at least read permission on the root directory of the local System partition (the partition that contains the startup files, NTDetect.com, NTLDR, Boot.ini, and possibly Ntbootdd.sys), or on the %SystemRoot% folder, which is on the Boot partition.

Logon as a local Administrator and verify/set at least read permissions on the system partition root. Do not select the Apply To Subdirectories check box.
If a profile for that user was just created in %SystemRoot%\Profiles, you may wish to delete it. Check for a new profile on the PDC also.

NOTE: If you removed Everyone from %SystemRoot%, you may have to temporarily issue CACLS %SystemRoot% /T /G everyone:R, at a CMD prompt.

See tip 176.