diff --git a/reactos/bootdata/hivesft.inf b/reactos/bootdata/hivesft.inf
index 13a119fc139..91f791c1b6a 100644
--- a/reactos/bootdata/hivesft.inf
+++ b/reactos/bootdata/hivesft.inf
@@ -3,11 +3,11 @@ Signature="$ReactOS$
 
 [AddReg]
 
-HKLM,"SOFTWARE\ReactOS\Windows NT\CurrentVersion\WinLogon","Shell",0x00020000,"%SystemRoot%\System32\cmd.exe"
-;HKLM,"SOFTWARE\ReactOS\Windows NT\CurrentVersion\WinLogon","Shell",0x00020000,"%SystemRoot%\bin\explorer.exe"
-HKLM,"SOFTWARE\ReactOS\Windows NT\CurrentVersion\WinLogon","StartServices",0x00010001,0x00000001
-HKLM,"SOFTWARE\ReactOS\Windows NT\CurrentVersion\WinLogon","StartGUI",0x00010001,0x00000000
-HKLM,"SOFTWARE\ReactOS\Windows NT\CurrentVersion\WinLogon","Userinit",0x00020000,"%SystemRoot%\system32\userinit.exe,"
+HKLM,"SOFTWARE\ReactOS\Windows NT\CurrentVersion\Winlogon","Shell",0x00020000,"%SystemRoot%\system32\cmd.exe"
+;HKLM,"SOFTWARE\ReactOS\Windows NT\CurrentVersion\Winlogon","Shell",0x00020000,"%SystemRoot%\explorer.exe"
+HKLM,"SOFTWARE\ReactOS\Windows NT\CurrentVersion\Winlogon","StartServices",0x00010001,0x00000001
+HKLM,"SOFTWARE\ReactOS\Windows NT\CurrentVersion\Winlogon","StartGUI",0x00010001,0x00000000
+HKLM,"SOFTWARE\ReactOS\Windows NT\CurrentVersion\Winlogon","Userinit",0x00020000,"%SystemRoot%\system32\userinit.exe"
 
 HKCU, "Control Panel\Desktop", "CursorBlinkRate",0x00000000,"530"
 
diff --git a/reactos/lib/msgina/msgina.c b/reactos/lib/msgina/msgina.c
index 472cab4b095..ca32556981c 100644
--- a/reactos/lib/msgina/msgina.c
+++ b/reactos/lib/msgina/msgina.c
@@ -16,7 +16,7 @@
  *  along with this program; if not, write to the Free Software
  *  Foundation, Inc., 675 Mass Ave, Cambridge, MA 02139, USA.
  */
-/* $Id: msgina.c,v 1.6 2003/12/07 00:04:20 weiden Exp $
+/* $Id: msgina.c,v 1.7 2003/12/27 11:09:58 weiden Exp $
  *
  * PROJECT:         ReactOS msgina.dll
  * FILE:            lib/msgina/msgina.c
@@ -195,21 +195,22 @@ WlxActivateUserShell(
   PROCESS_INFORMATION pi;
   HKEY hKey;
   DWORD BufSize, ValueType;
-  WCHAR pszUserInitApp[MAX_PATH + 1];
+  WCHAR pszUserInitApp[MAX_PATH];
+  WCHAR pszExpUserInitApp[MAX_PATH];
   BOOL Ret;
   
   /* get the path of userinit */
   if(RegOpenKeyExW(HKEY_LOCAL_MACHINE, 
-                  L"SOFTWARE\\Microsoft\\Windows NT\\CurrentVersion\\Winlogon", 
+                  L"SOFTWARE\\ReactOS\\Windows NT\\CurrentVersion\\Winlogon", 
                   0, KEY_QUERY_VALUE, &hKey) != ERROR_SUCCESS)
   {
-    /* FIXME - why does this always fail??? */
     VirtualFree(pEnvironment, 0, MEM_RELEASE);
     return FALSE;
   }
   BufSize = MAX_PATH * sizeof(WCHAR);
   if((RegQueryValueEx(hKey, L"Userinit", NULL, &ValueType, (LPBYTE)pszUserInitApp, 
-                     &BufSize) != ERROR_SUCCESS) || (ValueType != REG_SZ))
+                     &BufSize) != ERROR_SUCCESS) || 
+                     !((ValueType == REG_SZ) || (ValueType == REG_EXPAND_SZ)))
   {
     RegCloseKey(hKey);
     VirtualFree(pEnvironment, 0, MEM_RELEASE);
@@ -229,8 +230,10 @@ WlxActivateUserShell(
   si.cbReserved2 = 0;
   si.lpDesktop = pszDesktopName;
   
+  ExpandEnvironmentStrings(pszUserInitApp, pszExpUserInitApp, MAX_PATH);
+  
   Ret = CreateProcessAsUser(pgContext->UserToken,
-                            pszUserInitApp,
+                            pszExpUserInitApp,
                             NULL,
                             NULL,
                             NULL,
diff --git a/reactos/subsys/system/userinit/userinit.c b/reactos/subsys/system/userinit/userinit.c
index a5d7c559fc0..5a39d9cca89 100644
--- a/reactos/subsys/system/userinit/userinit.c
+++ b/reactos/subsys/system/userinit/userinit.c
@@ -16,7 +16,7 @@
  *  along with this program; if not, write to the Free Software
  *  Foundation, Inc., 675 Mass Ave, Cambridge, MA 02139, USA.
  */
-/* $Id: userinit.c,v 1.2 2003/12/07 01:17:28 weiden Exp $
+/* $Id: userinit.c,v 1.3 2003/12/27 11:09:58 weiden Exp $
  *
  * COPYRIGHT:   See COPYING in the top level directory
  * PROJECT:     ReactOS Userinit Logon Application
@@ -39,7 +39,7 @@ BOOL GetShell(WCHAR *CommandLine)
   BOOL Ret = FALSE;
   
   if(RegOpenKeyEx(HKEY_LOCAL_MACHINE, 
-                  L"SOFTWARE\\Microsoft\\Windows NT\\CurrentVersion\\Winlogon", 
+                  L"SOFTWARE\\ReactOS\\Windows NT\\CurrentVersion\\Winlogon", 
                   0, KEY_QUERY_VALUE, &hKey) == ERROR_SUCCESS)
   {
     Size = MAX_PATH * sizeof(WCHAR);
@@ -50,7 +50,7 @@ BOOL GetShell(WCHAR *CommandLine)
                        (LPBYTE)Shell,
                        &Size) == ERROR_SUCCESS)
     {
-      if(Type == REG_SZ)
+      if((Type == REG_SZ) || (Type == REG_EXPAND_SZ))
       {
         wcscpy(CommandLine, Shell);
         Ret = TRUE;
@@ -76,6 +76,7 @@ void StartShell(void)
   STARTUPINFO si;
   PROCESS_INFORMATION pi;
   WCHAR Shell[MAX_PATH];
+  WCHAR ExpandedShell[MAX_PATH];
   
   GetShell(Shell);
   
@@ -83,8 +84,10 @@ void StartShell(void)
   si.cb = sizeof(STARTUPINFO);
   ZeroMemory(&pi, sizeof(PROCESS_INFORMATION));
   
+  ExpandEnvironmentStrings(Shell, ExpandedShell, MAX_PATH);
+  
   if(CreateProcess(NULL,
-                   Shell,
+                   ExpandedShell,
                    NULL,
                    NULL,
                    FALSE,
@@ -97,6 +100,8 @@ void StartShell(void)
     CloseHandle(pi.hProcess);
     CloseHandle(pi.hThread);
   }
+  else
+    MessageBox(0, L"Userinit failed to start the shell!\n", NULL, 0);
 }
 
 int WINAPI