Windows server 2003 domain Workstation cannot install software

I have one workstation on a small network (10 workstations)that gives access denied when trying to install or uninstall software when logged into the domain.

I have given the user Administrator privileges and even logged onto the workstation as administrator and still have the same problem.

This problem was just noticed this week. It was setup several months ago and software was installed without any problem.

If I logon locally, not on domain then software can be installed and removed but of course network applications cannot be installed.
Thanks in advance.
p.s. All workstations using Win XP Pro sp/2