This applies only to Active Directory and New Roaming Profiles:

I just ran into this exact same problem: after setting up the profile
path in Active Directory, the user recieves an error that they are
using a temporary profile.  This ultimatly had to do with the “profile
path” I had entered “\sbserverusershares%username%”.

The server will try to append and extension indicating the
profile/windows version to the path, in my case it was “.V2″ making the
path “\sbserverusersharesjohn.V2″.  Unfortunately, the user does not
have permission to modify the “UserShares” folder
so a temporary profile was used for that session.  This can be resolved
by adding a trailing backslash making the profile path a folder named
“\sbserverusersharesjohn.V2″.  To make thing more windows like, I
ultimately made the profile path
“\sbserverusershares%username%PROFILE” and windows translated this
to “\sbserverusersharesjohnPROFILE.V2″.

This applies to existing roaming profile that started acting up:

For roaming profiles that started acting up, you will be heading for
more of an up hill battle: the profile can exist on multiple machines,
and the server, and will replicate from machine to server to machine. 
You will want to rename the user profile
folder on the server or current workstation as this is the current
copy.  From there, go to each and every workstation that has the profile
in question log in, and rename it.  Once the use logs in again, it will
create a fresh new profile. 
Copy his documents, favorites, PSTs, and so on back into his new
profile.  Make sure to do this on all machines that have a copy of the
profile, otherwise a login on the wrong machine could corrupt his
profile again.

Workgroup/standalone computers:

This is usually due to a corrupt user profile, corrupt default
profile, corrupt user account, file system, or windows problems.  Start
by renaming the profile and letting windows create a new profile.  Copy
back the users data.  The second
step is to rename the users profile directory, delete the user, create a
new user, and copy the users data back. 

A fatally corrupted file system can be causing user profile issues. 
Run a check disk and retry the proceeding steps.  If that fails, windows
could be to blame.  But always give web searches a good try before
blowing away Windows.

Shawn Zernik
Internetwork Consulting