windows xp security settings

I recently had a classmate institute a local security policy on my wife’s dell inspiron laptop. Since then she has not been able to load the Yahoo Music Engine or recieve any updates from windows. I tried to reset the security to the default out of box settings, but this only complicated things more. After reinstalling service pack 2, i was able to fix the newly created issues, but the Yahoo Music Engine and the Windows update problems still exist. Can anyone provide a solution to this dilema?

Thanks,
Steve