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When I log on to XP as a local admin, my PC doesn't log in to the domain. But I still find some local policy that is non-editable (grayed), such as password policy. I logged in to the domain before, so I guess the domain policy overrode my local policy, but now how can I edit them back?
Where are you attempting to edit the policy? First, make sure your computer is no longer a domain member but a member of a workgroup. Click on Start, Settings, Control Panel, System, and check Computer Name. Then add the local group policy snap-in to an MMC console. You should be able to make settings for the password policy there. Another way to change such settings is to use the Security Templates and Security Configuration and Analysis snap-ins.
is a good introduction to the subject.