Event 1096 The processing of Group Policy failed.

 

I came across this issue and I think it's worth mentioning it here.

There was the desktop which was not getting any domain machine policy. Looking at the GPRESULT policy event, it has a lot of Event ID 1096 errors "The processing of Group Policy failed. Windows could not apply the registry-based policy settings for group policy object LocalGPO."

When you do a "gpupdate /force", you see errors like these:

"Computer policy could not be updated successfully. The following errors were encountered:
The processing of Group Policy failed. Windows could not apply the registry-based policy settings for the Group Policy
bject LocalGPO. Group Policy settings will not be resolved until this event is resolved. View the event details for mor
information on the file name and path that caused the failure."

So, it turned out that the domain policy cannot be processed due to a problem with the local policy. To fix this problem, the local policy file will have to be removed. There is this registry.pol file located at:
c:\Windows\System32\GroupPolicy\Machine. Rename this file to .bak or whatever and refresh the policy with a gpupdate /force. The problem will go away. The policy file could have been corrupted.

Source: http://social.technet.microsoft.com/Forums/en-US/w7itprosecurity/thread/ccf3b6ef-1321-46bc-95ae-03e534b5ae5c/