Pain in the ass isn't it.
I had the same thing whilst logged into the domain.
Here's what I did that worked.
Log off the current user on the xp client.
Log in as the local administrator, or another local account with admin rights.
(To bring up the admin account you may need to press control-alt-delete twice at the login screen to bring up the login, if you are at the list of users screen - (cant remember what its called)
Don't try to log into the domain, or use any domain account.
now change the name of the pc, but at the sametime change it from domain logon to workgroup logon.
use any bogus workgroup name.
You will be asked for a username/password to leave the domain.
Enter admin as user and put in the admin password you use on your sme domain controller.
You will have now left the domain and changed the computer name.
Now, simply change it back to domain login.
Put in the same user/password to join the domain, and voila, you have renamed your pc.
(I'm pretty sure I didnt reboot after leaving the domain, I just said no, reboot later, then rejoined the domain, then rebooted and retested it.
Bit of a long-winded way to go about it, but the only way I know that works
joshAU