Yup I was running the DNS server. I first watched that the probelm might be with the DSN setting on the cleint machine, there was an a miscongifuration that in the DNS server the IP address of the Domain Controller was not explicitely mentioned instead it was set to "Obtain DNS automatically" So I changed the DSN setting for the client mahcine and set the IP address of the DC in the DNS IP address field. But the probelm did not resolved
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Then I watched for the other options and found that in the DC security policy there is an option "Allow Log on Locally" and in this option only the Admin was added only so when I added the Domin user group I was able to log on to domain form the client machine.
http://support.microsoft.com/default.aspx?scid=http://support.microsoft.com:80/support/kb/articles/Q247/9/89.ASP&NoWebContent=1 Please note that I wasted some of my time seraching for the option "Log on Locally" present in the Win XP under the security setting--->User Right Assignment but in the Domain controller Security Policy you will not find the same policy name as present in Win XP instead it is defined as "Allow Log on locally".
