I used to do what you are doing in my login script for both W2K and XP. I had no problems adjusting the timeout. I didn't use Jen's UpdateUserParameters UDF, but just a simple set command (I think they are doing similiar things, just differnt ways). Here's a link to a post similar to this: Applying Registry Settings
You might try the set command, but if Jen's UDF is not working, the set probably won't help either.
Code:
$sskey = "HKEY_CURRENT_USER\Control Panel\Desktop"
WriteValue($sskey, "ScreenSaveActive", "1", "REG_SZ")
WriteValue($sskey, "ScreenSaveTimeOut", "120", "REG_SZ")
WriteValue($sskey, "ScreenSaverIsSecure", "1", "REG_SZ")
WriteValue($sskey, "SCRNSAVE.EXE", "C:\WINDOWS\System32\scrnsave.scr", "REG_SZ")
set 'ss='