Help -Hang when setting 3rd acct to admin

I installed XP over an old HP 4150 laptop with Win 2K. I have no problem with the administrator acct or my acct which has administrative rights. When I add a 3rd acct as admin and log on to it, the boot sequence hangs when displaying the message 'loading user preferences'. The admin and my acct still work ok. I have tried deleting all accounts but myself and admin and re-adding them - no luck. Reinstalled SP2 - no luck. What's odd is that I CAN add a 3rd account with limited rights. Bug? Security policy? Workaround?