Any GPEDIT disabled message?
Reading http://forums.techarena.in/windows-security/1071781.htm was interesting in their replies as they were working with a hand me down machine with issues.
I'm running XP home. When I open the control panel, and then open the performance and maintenance page, and select the system icon, I get the following error: An error occurred while Windows was working with the Control Panel file C:\WINNT\system32\sysdm.cpl. What gives?