I'm using Windows 2003 server as active directory and Windows 7 as a station. I need to have a regular domain user have admin rights on local machine. I added domain user to local admin group but they still do not have full access as local administrator.

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Just to confirm, the Windows 7 machine is joined to the domain. Yes? – squillman Dec 19 '11 at 20:09
Yes it is, in fact domain admins belong to local admin group, I just added a regular domain user to local admin group but still no rights on local machine – Renny Dec 19 '11 at 20:41
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And you're positive that it was the domain user that got added and not a local user with the same name? (sorry, just trying to run through the obvious things! :) Do you see it listed in the Administrators group on the PC? – squillman Dec 19 '11 at 20:55
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Curious. Also what action are you using to "test" that the user has full access as local administrator? – surfasb Dec 19 '11 at 21:11
I just disabled UAC and now it works! – Renny Dec 20 '11 at 20:50
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On the workstation log in as domain admin and issue

net localgroup Administrators /add DOMAIN\USER 

That will make the domain user an Administrator on that workstation only.

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I'm assuming that's what the OP did when he said, " I added domain user to local admin group . . ." If not, then that's our problem. – surfasb Dec 20 '11 at 8:50
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