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Loopback policy does not apply on Vista machine, if security filtering is customized

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Scenario:

If we create a group and assign the users to the group.

Create a loopback policy for users in merge mode and assign the group to security filtering for the loopback policy and give the following permission:

Read and Apply Group Policy.

User side of the policy will not apply.

From the GPSVC logs, we see the following:

Machine Side:

GPSVC(434.4b8) 15:00:19:206 EvalList: Object <cn={630069B4-401B-4DB0-9559-EF4D821D04FE},cn=policies,cn=system,DC=childA,DC=dom147330,DC=local> cannot be accessed

User Side:

GPSVC(434.1c8) 15:05:54:924 EvalList: Object <cn={630069B4-401B-4DB0-9559-EF4D821D04FE},cn=policies,cn=system,DC=childA,DC=dom147330,DC=local> cannot be accessed

For more details look into the below article:

https://support.microsoft.com/kb/953768