I upgraded our domain controllers from 2008 sp2 to 2008 r2 sp1. Now none of the Windows 7 machines can apply group policies that are inside child OUs.
I have went through the event logs on both the server and workstations, ran dcdiag on the server that has all the fsmo roles assigned, and checked the wmi filters. Everything appears to be normal.
XP computers seem to work fine.

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How do you know the GPOs aren't applying? Are you running GPRESULT to see what the messages are stating?

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Yes. I run gpupdate /force the gpresult -r on the Windows 7 machines and the GPOs do not show up anywhere. I can link the same GPO to the Parent OU and it will show up in gpresult.

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Check to be sure inheritance is not blocked.
See below pic (sorry it's in french, but it show where it's)
MCP | MCTS 70-236: Exchange Server 2007, Configuring

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I have checked that already. The funny thing is that Windows XP seem to work fine. The policies are just not being seen by the Windows 7 machines.

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I found out what my issues was. I guess when I updated to R2 that it fixed an issue that I did not even know I had. I had a policy right under the domain that had Loopback processing turned on and set to replace. I turned loopback processing off and everything
is working fine.

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