I configured our Version 3.0 to use forms based authentication as it was stated in the Video and it works great accept.

The user accounts created are only allowed to login once then if they log out they can never get back in it always states.

The server could not sign you in. Make sure your user name and password are correct, and then try again.

This would be great but I have not the foriest idea whats causing this any ideas would be great.

Here is an entry I found in the diagnostics log.

An SPRequest object was not disposed before the end of this thread.  To avoid wasting system resources, dispose of this object or its parent (such as an SPSite or SPWeb) as soon as you are done using it.  Due to flags specified at object creation, this will not be freed until processed by garbage collection.  Allocation Id: {073A869C-AA26-41C1-8AE1-671E1BA70CF2}  To determine where this object was allocated, create a registry key at HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Shared Tools\Web Server Extensions\HeapSettings.  Then create a new DWORD named SPRequestStackTrace with the value 1 under this key. 

And Also
Localized resource for token 'DistributionLists_Alias' could not be found for file with path: "C:\Program Files\Common Files\Microsoft Shared\Web Server Extensions\12\Template\xml\base.xml".

These errors are thrown each time a user trys to login using forms

I am also getting the following error as well
Cannot delete temp file: C:\WINNT\TEMP\OLD168.tmp Error = 5