When you use an existing profile for a new user account, the new account SID does not match the SID set on the profile. This can cause not enough memory and out of resources messages and well as other strange behavior such incorrect wallpaper.
Add the user to the local Administrators group and then use Regedt32 to navigate to: HKEY_USERS\<SID>
Use Security / Permissions / Add and grant the user Full Control. Click OK. Check the Replace Permission on Existing Subkeys and click OK.
NOTE: If the user is not listed, click Show Users.