Clarification:

Windows 2000 - Add Printers OK
Windows 2000 - Change Default OK

Windows XP - Add Printers OK
Windows XP - Change Default BAD

I reloaded the machine with W2K on it with WinXP and ran the script localy (no network setup). It worked fine. So either there is a problem running it remotly or there is a problem with my network setup conflicting with KiXtart.