Users with cached Group Policies, logging in "workstation only", are not receiving all of the settings specified.

I have followed the steps in TID 3655065, but security tab settings, and homepage are still incorrect.

Windows XP SP2
Zenworks 7
ZDM 7 SP1 IR4 HP4 applied
Workstation policy package GPO:
Computer and Security checked - with persist

User policy package GPO
User checked - with Cache set

When logging in to Novell client on network, the policies work fine.
Logging in workstation only is when the problem exists.

Two errors show -
Error 2 reading Cache User Settings
Error 0x2 refreshing User policy.

Attached is the WMGrpPolUser.log