Thanks for the tip. I did find what was wrong and it may help someone else to know this as well.
When a new tech made the lastest image for ghosting machines he installed NOTES as the administrator of the box. When I set up the user they were part of the administrator's group during the setup. After it was all setup I took them out of admin and put into the power users group. Turns out when LOTUS NOTES is installed it writes a value to the registry for the TEMP directory. When installed as an ADMIN, that directory is c:\documents and settings\administrator\..... Of course, when the average user tries to use it he cannot access that directory. There are several ways around the problem. For the short term, I put the user back into the Admin group and everything works fine now.
By the way this is Notes Client 5.0.11 and WINXP. It is also a problem with WIN2K.
Thanks again, klh456.