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First, make sure you are not on a domain. Next, Make sure that Fast User Switching is enabled, and Terminal Services need to be started as well. It is not clear to me how technical you are so I will tell you how to access the services on your pc. Right click on my computer then select manage, then expand the services and application tree and select services on the right hand side right click on the above mentioned services and click start.

Yes, terminal services is started as well as RPC which is also needed, I believe. No domain is used- only a workgroup.

What about the Fast User Switching service?

Yes, the fast user switching service is started.

Point value changed by question poster.

Fast user switching will not work if you have enabled offline files. To check this, access folder options through explorer (Windows Explorer) or Control Panel. Choose the tab [offline folders] and verify that it is NOT checked.

Please see this kb article from Microsoft:-
http://support.microsoft.com/kb/280758.
This KB article mentions that, the computer must be a member of a workgroup (not in a domain).