I've searched Google and AO and a few other sites including support.microsoft.com with no luck. Has anyone ever seen this:

Dell Laptop
Pent M 1400MHz
1 GB Ram
80 BG Drive
XP Pro SP2 current updates
Office Scan - Updated No Virus (HouseCall No Virus)
Search and destroy and MS Antispyware say no spyware
HijackThis shows OK

From any pc on the network user can access and create new folders on specific network drive.
From his laptop user can access but NOT create new folder on said drive. (Permissions are correct)

When trying to create a new folder the following error is displayed:

Unable to create folder
File system error (16389)

When I check permissions via explorer on the laptop, properties show read only (This is not true)
Server permissions and share set to modify.

This issue can only be replicated on said laptop.

I'm stumped - ideas?