1) Does user 2 on user 2 machine save to c:\ ?
2) Can user 1 on user 1 machine generate the pdf successfully to a folder in c:\ say c:\test to which folder user 1 has read - write permissions
3) can user 1 generate pdf file from any other software - say word ?
4) can you try to run process monitor / file monitor from sysinternals and check if you get any access denied errors ?
:
Sanjay