Unable to Create New Profiles

In Windows Vista Business, we are receiving the following error after
renaming the profile folder for a user and then trying to log on again so
that a new profile is created. (We're trying to recreate the user profile
due to an issue with a third-party application that is running fine for other
users on the same system.) The error message is "Unable to log you on
because your profile could not be loaded, please contact your administrator".
A folder called C:\Users\TEMP is created, but no settings are saved. We've
tried copying different existing profiles to C:\Users\Default, but still
cannot log in as a new user. Any ideas on how to troubleshoot this issue?
Thanks!