Security Event ID 533 - user can't access OWA or RWW

SBS 2003 Premium, current with patches and updates. User running Vista Business.
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New employee, setup in SBS with Add User Wizard. Unable to login to OWA or RWW either internally or externally - also tried on other computers. Checked her account in ADUC and found nothing wrong compared to other users. Keep getting this error in server security log:

Event Type: Failure Audit
Event Source: Security
Event Category: Logon/Logoff
Event ID: 533
Date: 1/30/2009
Time: 6:30:57 AM
User: NT AUTHORITY\SYSTEM
Computer: <computername>
Description:
Logon Failure:
Reason: User not allowed to logon at this computer
User Name: jessica
Domain: <computername>
Logon Type: 3
Logon Process: Advapi
Authentication Package: Negotiate
Workstation Name: <computername>
Caller User Name: IUSR_<computername>
Caller Domain: <domainname>
Caller Logon ID: (0x0,0x3B5E3)
Caller Process ID: 6008 <this is w3wp.exe, called by user NETWORK SERVICE>
Transited Services: -
Source Network Address: -
Source Port: -

I've tried (twice) backing up her email and docs, then deleting her account (rebooted server the second time), before adding her back in -- same result. I can create a new account with a different name and it does NOT have this problem. I know the quick fix is to create a new account for her with a different name and marry it up with her docs and email account, but I'd kinda like to fix this and KNOW what went wrong.

Any ideas out there?

TIA,

--
Mike Webb
Platte River Whooping Crane Maintenance Trust, Inc.
a conservation non-profit (501 (c)(3)) organization
Wood River, NE

.

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