The Registry is logically one data store, but physically it consists of two different files to allow maximum flexibility for network configurations:
System policies can override settings in these two .DAT files to enforce user-specific and computer-specific information, as described in Chapter 15, "User Profiles and System Policies."
By default, USER.DAT and SYSTEM.DAT are stored in the Windows SYSTEM subdirectory, but these two files can be located in physically different locations. For example, if user profiles are enabled, SYSTEM.DAT can be stored on the local hard disk and USER.DAT stored in each user's logon directory on the network, allowing "roving" users to maintain the same desktop preferences wherever they log on to the network. For shared installations, these files are stored in the machine directory.
For information about how Windows 95 chooses between local and network versions of USER.DAT when loading a user profile, see Chapter 15, "User Profiles and System Policies."