In my case, I had to delete user account in the Active Directory, and create it anew.
In my case, this error was logged on my Terminal Server. This error also caused the user not to have a "default" printer when he logged in. I found the problem to be caused by copying a profile from another user (so I would not have to configure the entire profile manually). I deleted the profile, let Windows create a new one and the problem was resolved.
This event was logged when users logged in remotely with the printers checkbox on the RDP local resources tab checked. This would reset the default printer to another printer with the same name. I reset the default printer to its proper source and renamed printers with default names to something unique.
For me this event showed up when trying to remotely connect to a Win XP box using Remote Assistance. After running "filemon.exe" on the computer that I was trying to remotely connect to, it showed "access denied" to a file located in "c:\windows\registration". Only Administrator and System accounts had full rights to files located in that directory. After giving everyone "read" rights only, I was able to successfully remote control the Win XP box and the event no longer showed up in the event log.
From a newsgroup post: "I´m having the same problem in my TS and the solution that I´ve found in Technet is to uninstall and reinstall terminal services (that´s what Microsoft says about the resolution). I´ve done this, but doesn´t work. I´m trying all the stuff, with no results."