Sounds like a permissions problem. Checkout this writeup from Microsoft:
Permissions that need to be set to allow automate users home directory creations
What SHARE permissions did you set for the "home" share? I'm guessing you just have "everyone" = read, and I think that is the problem.
Now, you don't want users getting in other users folders, so set the FILE permissions on the home folder to Give domain administrators full control, and NO access for regular users. Do NOT enable propagation...you want these file permissions on the actual home folder only, not the subfolders.
When the Home folders are created for the users, I *think* the server will automatically give the users full control to their own folder, but you may want to spot check to make sure users get at least change rights to their own folder.
When you have different settings for SHARE permissions and FILE permissions, the "most restrictive" setting wins. Thus users can't get into each others folder, despite the fact that the share permissions are not particularly restrictive.