Problem with creating home folders

I am trying to create users home directories on a standard 2003 server. If i go to AD users & computers, username, profile. connect H to \\servername\Home Folders\%username%. It gives me the message “home folder was not created because you do not have create access on the server”. It will let me create this manually but when the user logs on even though they have the correct setting for the “H” drive they can’t create or delete any objects within it.