Local machine policies gone

I have a Win 2K laptop that when I go to log onto the local machine, as opposed to logging into our domain, I'm told that the profile is not set-up to work interactiveally. This is the Administrator and the user whose computer this is. I can however log onto the domain with no problem with both usernames and passwords. Why has this happened and Can I restore the local machine policies without much trouble? The user doesn't want to loose the customizations he's made to the desktop, etc. Help please........