Since Fast User Switching (FUS) seems to work the majority of the time for you, I'm not sure if my suggestions will be of any good to you...but they're all I can think of offhand.
1. Just for information only, since I noticed you have 512MB of RAM installed...but if you only had 128MB of RAM installed, Shared Video Memory (SVM) reserves 8MB or more for use as video RAM--in as such Fast User Switching would be disabled because FSU actually requires 120MB of RAM.
2. Either a corrupt or third party msgina.dll (Windows NT Logon GINA DLL) can cause FUS to stop working. I believe you would need to delete the msgina.dll reference(s) under the following Registry Key (or at least restore the original Windows version of the file...located in the %systemroot%\System32 directory, by using the System File Checker or extracting the file from the SP1 upgrade). I believe the latest version of the *.dll is 5.1.2600.1106 (xpsp1.020828-1920). Start | Run | Type
regedit and click OK | Expand the following branch...
HKEY_LOCAL_MACHINE | SOFTWARE | Microsoft | Windows NT | CurrentVersion | Winlogon
3. There are also known problems/conflicts if you have PCAnywhere, Lotus Notes, and/or Cisco VPN software installed.
4. In Services...scroll down to Terminal Services and make sure it's started, and the "Startup type" is set to "Manual"
Path to executable:
C:\WINDOWS\System32\svchost.exe -k netsvcs
Also under Log, verify that your profile is enabled: "Log on" tab | Hardware Profile-->"Profile 1" | Enabled.
5. Check to make sure the following Services are set to "Manual"...
Remote Access Connection Manager
Remote Access Auto Connection Manager
Telephony
6. Open the Event Viewer in order to access the error logs, and check for any critical errors...Start | Run | Type
eventvwr.msc and click OK | Highlight "Application" and "System" independently in the LH pane | If any are found, right click the error message(s) (critical errors are in
Red), and select "Properties" | Write down a couple of the error messages related to Fast User Switching
exactly as they appear (under the "Description" field), and post them in this thread.