"The Win16 Subsystem was unable to enter protect mode, DOSX.EXE must
be
in your AUTOEXEC.NT and present in YOUR PATH"

After much searching my group finally found a fix for this problem.
Problem is... the fix doesnt seem to make sense.. but it works!!!!

FIX
Remove the 'Default User' profile (Located in C:\Winnt\Profiles) and
replace it with on from another pc that does not receive the above
error message. Thats it.. error message gone and problem fixed!!!