Unable to update Default User profile on Windows 2003 R2

I have done the normal procedure literally hundreds of times of logging in as a User-A, configure everything in the world you want for your settings, then copying the User-A profile to the Default User.

For some reason a new server build running W2K3 R2 with SP2 and all current Critical Updates does not allow this procedure to happen. The only item of note is that this particular server is a terminal server. It will be replacing two older TS’s, which I have done this exact same tweaking of the default user profile.

What I receive is an error box entitled “Profile Error” with the following message “Directory could not be deleted. Please delete the directory and retry.”

There is no associated error in the event logs.

My search online has only turned up the procedure I’ve outlined above, or one for a AD Domain wide default user profile being copied into NETLOGON.

Any ideas? I tried doing this from Safe Mode but then the server doesn’t know the SIDs and when you select the unknown account (I choose the one I want to use by its size) the option to “copy” is not available.

Thanks in advance.