Not sure if it will help anyone else, but I figured out a solution. It appears if I kill or do not allow the "persistencethread.exe" process to run, the computer is able to maintain the screen brightness I choose w/ the brightness adjustment function keys on the netbook.
Also, just installed the latest driver released last week. It is version 126.96.36.1992 of the Intel driver for Windows XP Pro. With it installed I do not have the stop the "persistencethread.exe." process.