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Reboot and Loopback processing

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We have a Windows 2012 DC with a member 2008 Terminal server. We enabled loopback processing (replace) on the Terminal Server and created a new GPO for locking down the Remote Desktop users and establish the proper security filtering. The policy is not working. Do we have to reboot the terminal server, the DC or both?  We tried gpudate /force on both servers but it did not make a difference.

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