Recently I came across this issue with KB#836895. It installs perfectly on Windows 2003 machines but refused to install on Windows XP development machines.
Since we are using some custome paramters that needed to be passed to different MCMS posting it was hard to debug since all the development machines where Windows XP.
If you are using FomrsAuthentication against ActiveDirectory you might want to search if a User Id exist in Active Directory or not before taking certain action like creating new profile.This return true or false depending on if user is found or not.