Cannot log on to new user account

[chip7]

I'm having two problems and I think they are related to each other:

Problem #1: I'm running Windows XP Pro with SP2. I can create a new user's account OK (with adminsitrator privilege), but when I tried to logon to it, the process starts and I receive a message telling me my personal
settings are being implemented, then I receive a message saying 'logging off' and I'm returned to the logon screen.

Problem #2: When I try to install a program, the installation process starts and then I receive the message "Failed to install ISKernel Files. Make sure you have appropriate privileges on this machine."

Any help anyone can provide me would be appreciated.

[mahdiislam]

Can you access the user account called "Administrator" and then do everything from there? If not, this seems like some form of malware.