Saw your post yesterday but held back for those that do more networking than I do. So this is more of a bump and nudge to your thinking.
XP Pro Resource Kit, page 676
You can use User Accounts ...or the Local Users and Groups MMC snap-in to add and remove local user accounts, add and remove users from groups, and work with passwords.
Don't know if this applies to XP Home or not, just thought it might help.
Ran into an interesting problem at work. It seems some of the Windows Updates updates were enabling this setting on some computers. Since I often am updating systems when users aren't around, and the fix involves setting the user to the admin group temporarily so that setting can be changed... Is it possible to create a registry "patch" that users could run to fix this? Something that could be stored on a common network share.