Another thing to try. A lot of our login lock outs are from people accidently setting the Caps Locks to on. Another favorite if you use the number keyboard, the Numlock could have been off. Either one of these errors could change the password. The password is case sensitive and if the numlock key is off, what ever you enter on that key pad is not being recorded.
Thanks for the help. Tried everything suggested and more and I'm getting nowhere. I thing the problem has been caused by either a virus or the drive going faulty as it's just not behaving in a standard way at all.
If you can get a copy of ERD Commander, a Sysinternals boot cd, it has a lockpick tool that will allow you to reset the password for the System Administrator. I guess thats why Microsoft bought them out. It works good, I use it about twice a year.
You need to get a copy from a friend, otherwise, the retail price is about $900--a bit steep!