Below is the answer which finally resolved my issue:
This can happen if some users ProfileImagePath registries are duplicated with other users' ProfileImagePath. To resolve the issue, perform the following steps:
1. Run "WHOAMI /USER /SID" to determine the users correct SID.
If you do not have the whoami command tool, you can download and install it from the link below.
Note: By default, it will install to the C:\Program files\Resource Kit folder. To run it, go to a command prompt and change the path to C:\Program Files\Resource Kit. Then type "whoami /USER /SID" (without quotes) and press Enter. It should display the current users name and SID.
2. Check the ProfileImagePath value under the following registry key: HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows NT\CurrentVersion\ProfileList\.
Note down this ProfileImagePath value.
3. Check the other ProfileList\ keys for matching ProfileImagePath values and deleted those keys.
Note: Please make sure you have backed up the registry key before you delete them.
4. Test and see if the problem is fixed.
Did you manually move your users' profiles to another drive? If you have moved the Documents and Settings folder, it will lead to the issue. Microsoft does not support moving the Documents and Settings folder in Windows Server 2003 or Windows XP to another drive. Although you can try the steps in M236621, Microsoft provides it for informational purposes only.