I have been developing some extensive group policies for a hospital I work at and I ran into a strange problem with a very simple fix.

This series of GPO's creates local folders and copies scripts and files to the local PC. All is well until one day all the files that are being copied down are now zero bytes. On top of that the event log is recording this error:

The client-side extension could not remove computer policy settings for 'xxx: Desktop Setup (Computer) {xxxx}' because it failed with error code '0x8007000d The data is invalid.' See trace file for more details.

The fix is to remove the local GPO cache directories from this directory: Documents and Settings\All Users\Application Data\Microsoft\Group Policy\History

Force a gpupdate /force and problem is resolved.

I am still looking into what is corrupted and will post back here if I find out why.