Hmm, that is very odd indeed.
I think the problem is your permissions, which is rare on XP, but on windows, far from un-heard of. I unfortunately cannot tell you how to set permissions on XP, though it is most likely from the properties dialogue, possibly under its own tab (either security or permissions).
Set the glest directories permissions to allow both your acount and any other things to have full control.
If needed, here's a copy of my ini (modified)
; === propertyMap File ===
CameraFov=45.00
CameraInvertXAxis=true
CameraInvertYAxis=true
CameraMaxDistance=1024.00
CameraMaxYaw=77.50
CameraMinDistance=4.00
CameraMinYaw=20.00
DisplayHeight=768
DisplayRefreshFrequency=75
DisplayWidth=1024
DisplayWindowed=true
GsAutoRepairEnabled=true
GsAutoReturnEnabled=true
GsDayTime=600.00
GsFogOfWarEnabled=true
GsRandStartLocs=false
GsSpeedFastest=2.00
GsSpeedSlowest=0.50
GsWorldUpdateFps=40
MiscAiLog=4
MiscAiRedir=false
MiscCatchExceptions=true
MiscDebugKeys=false
MiscDebugMode=false
MiscDebugTextureMode=0
MiscDebugTextures=false
MiscFirstTime=false
MiscLowMemory=false
NetChangeSpeedAllowed=false
NetConsistencyChecks=false
NetFps=8
NetMinFullUpdateInterval=60000
NetPauseAllowed=false
NetPlayerName=Omega
NetServerIp=192.168.1.1
NetServerPort=12345
PathFinderMaxNodes=512
PathFinderUseAStar=false
RenderCheckGlCaps=true
RenderColorBits=32
RenderDepthBits=32
RenderDistanceMax=1024.00
RenderDistanceMin=1.00
RenderFilter=Bilinear
RenderFilterMaxAnisotropy=1
RenderFogOfWarSmoothing=true
RenderFogOfWarSmoothingFrameSkip=3
RenderFontConsole=Arial
RenderFontDisplay=Arial
RenderFontMenu=Arial
RenderFov=60.00
RenderFpsMax=60
RenderGraphicsFactory=OpenGL
RenderLightsMax=4
RenderShadowAlpha=0.30
RenderShadowFrameSkip=2
RenderShadowTextureSize=256
RenderShadows=Projected
RenderStencilBits=0
RenderTextures3D=true
SoundFactory=DirectSound8
SoundStaticBuffers=16
SoundStreamingBuffers=5
SoundVolumeAmbient=70
SoundVolumeFx=90
SoundVolumeMusic=80
UiConsoleMaxLines=10
UiConsoleTimeout=10
UiEnableCommandMinimap=true
UiFocusArrows=true
UiLang=english.lng
UiPhotoMode=false
UiScrollSpeed=1.50