reghakr,
I have to respectfully disagree about setting Windows Logon as the Primary Login. The computers access a local network and this setting needs to stay as "Client for MS Networks".
lgstech,
By default, win9x will let any users create a new username if "Windows Login" is set. If "Client for MS Nwks" is set, then the username is checked out on the domain server and validated. As long as the user exists on the logon server, then the .pwl file will be created locally under C:\Windows. If you were to follow reghakr's procedure above, it would only resolve your problem temporarily until the next user logs on with a different username. You'd find yourself in the same position.
I am not aware of a tweak in the registry that can prevent this. However, I do believe there is a way to always display the same username at startup, though I can't seem to recall how to do it. I'll do some more research and post back in a bit...