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1,==>Does anyone know if this is actually the case or if there is documentation on what processes might be blocked during OSD TS?
Per my experience, yes, GPO settings for all OS layers are applied after a TS is finished. The further explain, GP cannot be applied during a task sequence, it is essentially blocked. When a task sequence finishes, it does not force any kind of refresh, but the machine is in a state where GP can now be applied. If it is critical to apply GP immediately, using a reg key and script is generally a good way.
2,Besides, if there is any error during the OSD, it's firstly recommended to examine the smsts.log on the target system. Please refer to:
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