Cannot Create New User in XP Pro

[parikrama]

I recently received a laptop from a colleague. I am logged in with admin rights, but I am unable to create or add any new user. Everytime I try to create a new user I get this message.

"Local Users & Groups
The following error occured while attempting to create the user "XX" on this computer.

The password does not meet the password policy requirements, Check the minimum passowrd length, password complexity, and password history requirements. "

The laptop is running XP Pro with SP2.

Any ideas as to what the problem could be..I have tried various options while creating a user, like "passowrd never expires", "user needs to change password at next login" and "user cannot change password". I have also tried out all the possible combinations amongst these 3 choices.
Does anyone know why I am unable to create new user. It does not matter if the new user has plain user rights or admin rights. As soon as I click on the "create" button, this message pops up...

Is it some group policy set up in gpedit.msc....

Thanks

 

[cleverhandle]

I don't see how an error message could possibly be any clearer...

The problem is exactly what the error message says it is - the password doesn't meet the requirements. It's either too short, too simple, or a repeat of a recent password. Try entering a long password with a mix of numbers, letters, and symbols that you haven't used before.

Yes, the requirements are determined by policy settings. Computer Configuration->Windows Settings->Security Settings->Account Policies->Password Policy.

 

[metallibloke]

There is a policy somewhere (maybe its where cleverhandle said it group policies) that requires the password to start with a capital letter, which has caught me out before.