Though I don't think this is specific to Policies per-se, I'm able to reproduce this issue when attempting to create an iPrint Policy Bundle.

In the wizard for creating an iPrint Policy bundle, when I browse to select the iPrint printer, I get an authentication dialog for browsing the tree, and at the next screen, when I select the blue down-arrow to navigate down my tree to find the iPrint printer, the CPU goes to 100% (ZENServer.exe process), and the only remedy is to reset the server! I'm unable to even bring up task manager to kill the ZENServer.exe process.

Any suggestions?