It doesn't sound like you have the Novell client installed. I have no experience with this on XP but it very much sounds like the case.
That, or you are not in a domain and should be configured for one; or you have the local workstation selected to login to and you should have the domain selected as the login source.
Anyhow, the Novel login should happen concurrently to the domain or workstation login, password synchronization now becomes an issue.

But, as Tony mentioned, you cannot gain access to the system without being validated against some password authority, be it a local or domain account.