"Error encountered while creating registry key. Make sure you have Set Value and Create Subkey Permissions."
Answer: The Winexit.scr does not run correctly under Limited accounts by default. However, by altering the Permissions for a registry key, you can resolve the problem.
See : Logoff Screen Saver Does Not Function in Windows NT
Note that this KB was written for Windows NT, but very much applies to Windows XP as well.
For configuring the registry Permissions, see the KB below:
How To Use the Windows XP and Windows Server 2003 Registry Editor Features
