Error occurs when attempting to apply the Manage action for a Group collaboration policy to a group and the Action State status reports "Adding auxiliary class"

Server: W2K8R2 Member Server in 2003 functional level domain
Services: Engine\Event Monitor\Agent 3.0.0.1
No services installed on any domain controller

Template Folder/Policy/Associated Group have owner/override path owner/managed by set to administrator account for the domain.

Engine/Event Monitor/Agent all changed to login as administrator for the domain

Template folder is an empty folder with -Group- and -Manager- granted full control

Attempting to "Manage" group creates base folder, but errors out in Pending events with error in title. Engine translog for event reports:

2010:12:17:17:12:50 Current State: 0 (Set policy collaborative) - Entering DoEvent()
2010:12:17:17:12:50 Current State: 2 (Calculating effective collaborative policy) - DoEvent() complete, result: 0
2010:12:17:17:12:50 Current State: 2 (Calculating effective collaborative policy) - Entering DoEvent()
2010:12:17:17:12:50 Current State: 3 (Waiting for policy to allow moves) - DoEvent() complete, result: 0
2010:12:17:17:12:50 Current State: 3 (Waiting for policy to allow moves) - Entering DoEvent()
2010:12:17:17:12:51 Current State: 5 (Waiting for policy paths to become accessible) - DoEvent() complete, result: 0
2010:12:17:17:12:51 Current State: 5 (Waiting for policy paths to become accessible) - Entering DoEvent()
2010:12:17:17:12:51 Current State: 5 (Waiting for policy paths to become accessible) - Getting information for policy path: "\\DEV-AD-W2K8R2\NSM\Group".
2010:12:17:17:12:51 Current State: 5 (Waiting for policy paths to become accessible) - Calculating leveling path...
2010:12:17:17:12:51 Current State: 7 (Creating managed path) - DoEvent() complete, result: 0
2010:12:17:17:12:51 Current State: 7 (Creating managed path) - Entering DoEvent()
2010:12:17:17:12:51 Current State: 8 (Adding auxiliary class) - DoEvent() complete, result: 0
2010:12:17:17:12:51 Current State: 8 (Adding auxiliary class) - Entering DoEvent()
2010:12:17:17:13:25 Current State: 8 (Adding auxiliary class) - DoEvent() complete, result: 55
2010:12:17:17:13:33 Current State: 8 (Adding auxiliary class) - Entering DoEvent()
2010:12:17:17:13:50 Current State: 8 (Adding auxiliary class) - DoEvent() complete, result: 55

I don't know what to try next. Any suggestions?