Vista - Logon Failure - Group Policy

A client's home office computer running Vista Home Premium is displaying the
following message when he tries to logon:

"The Group Policy Client Service failed the logon. Access is denied."

I thought the Vista home editions didn’t support GPOs. Am I mistaken?

Anyway, I created a new user and profile in Safe Mode and am able to logon
with it, but he’d really like to logon using the original user name and
profile.

Is this issue solvable, or should I assume the profile is corrupt and start
copying files and settings into the new profile?

PS: I found no restore points on the computer in Safe Mode, or with the
newly created account.

Thanks for the help.