may well NOT be related to nLite, i'm just checking.

can someone with xp and nLite 1.3 or one of the 1.3 RC builds check to see if they have this key:

HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows\CurrentVersion\Group Policy\History

does the "history" key exist?

are you getting a 1047 error in event viewer in the application log?