The processing of Group Policy failed. Windows attempted to read the file...

Hello all-

I am currently trying to configure group policy (specifically folder redirects) from a new Windows Server 2008 in my home... the server acts as both an AD DS and file server for 4 client computers, all running Windows Vista Ultimate.

Here are the steps I am currently taking:

1. I create a new Group Policy called All Users and Computers and apply it to the All Users and Computers OU, which contains exactly what it says (all users and computers in the domain).
2. I verify that a new folder was created in \\<FQDN>\sysvol\<FQDN>\Policies.  The new folder created is named {6479C8E0-3134-4B4F-B047-7ADD51684684}
3. I change the GPO Enforced setting to Enforced.
4. I attempt to use the gpupdate command to see if the group policy can be updated successfully.  In a command prompt, I type gpupdate <enter>.  I receive the message 'Updating Policy...' then after about 15 seconds the message 'User Policy update has completed successfully.'
5. I keep the cmd window open.  After about 10 seconds another message apperas which says "Computer policy could not be updated successfully.  The following errors were encountered: The processing of Group Policy failed.  Windows attempted to read the file \\<FQDN>\sysvol\<FQDN>\Policies\{6AC1786C-016F-11D2-945F-00C04Fb984F9}\gpt.ini from a domain controller and was not successful.  Group Policy settings may not be applied until this event is resolved. This issue may be transient and could be caused by one or more of the following:
   
   a) Name Resolution/Network Connectivity to the current domain controller.
   b) File Replication Service Latency (a file created on another domain controller has not replicated to the current domain controller).
   c) The Distributed File System (DFS) client has been disabled.
   
   To diagnose the failure, review the event log or invoke gpmc.msc to access information about Group Policy results."
6. I confirm that the error code is #3 using the Event Log, "The system cannot find the file specificed"

 

Of course the system cannot find the file specified because the folder does not exist in the sysvol folder. I am wondering why Windows is trying to read from this location when it does not exist, and is not the new group policy I created!  I have no other group policies linked or enforced to any other OU/Domain/etc.  Any help resolving this issue would be greatly appreciated.