Win XP and Local Profiles

We are running a domain with a whole bunch of policy settings… The problem i am having is that one of the students on our network – when he logs on to the one particular PC it do his setup like his is its the first time he logs onto the PC but it does not create a new profile for him in the Documents and Settings folder. If i log on as the domain administrator and go into his profile and change the ntusers file or if i restart the computer and log on as him again all is fine but jus as he logs out and logs back in – it does the whole re-install of the setup again…please can anyone help?