XP Pro client on Win2K network

I’m managing a Win2k network with about 70 Win98 clients. Recently purchased several XP Pro machines & am able to log in to the domain, & the logon script (to map drives) runs fine. After logging on to the domain I get the following messages:
1stmessage

click OK and the next message pops up
2nd message

We don’t use roaming profiles & any user can log on to any Win98 computer without a problem, I just can’t get anyone logged on to any of the XP Pro desktops, even if they have a local profile set up.
What am I missing? Is the problem on the server-side or client-side?
I don’t have enough space to list everything I’ve tried — help!