I'm experimenting with Group Policy settings. My DC is running Server 2003, and the client I am using for this test is running Win7. I've restarted the client a few times, and tried running gpupdate/force for good measure.
This machine is in it's own OU with a group policy applied to change one setting, Computer Configuration/Administrative Templates/Network/Offline Files.
When I run MMC and look at Local Computer Policy on the client this setting shows up as "not configured".