Users cannot add to startup folder

I have a small mixed 2000/XP doamin. There are several users who wish to add
programs to the startup folder in thier Doc&Settings folder and cannot.

With the folder open we can create a shortcut to another shortcut, but
cannot create a shortcut and even then the item disappears as soon as the
folder is closed and reopened.

If an item is dragged into the folder from say the Desktop, it disappears
from the desktop and does not appear in the startup folder.

I have noticed that a user with Domain/Enterprise Admin rights can create or
add items to the startup folder.

Could this be an issue with group polciies? If so which policy covers this?
If not does anyone have suggestions?

Thanks.