Question : Local policy does not permit logon interactively with Terminal Services URGENT!!

I was given control of a server that some long gone admin setup.

We acquired a new company so I am creating an "OU" for that company to add users too so they can connect and launch our ERP through Cirtix.
We already have other units but I do not know how the other guy set them up, I have tried just to use the same security groups in the new "OU" but it does not work so I am starting from scratch.

When I make a test user in that "OU" and try to login with remote desktop this happens.

First I was asked to change my password which I thought was a good sign.
Then it says "The local policy of this system does not permit you to logon interactively".

I searched online and came up with this next solution that I tried.

I creted a security group in the "OU" with the defaults "Global" and "security group" checked.
I went into the properties of the "OU" and created a group policy for it.
I edited the group policy
I went into computer configuration\windows settings\security settings\local policies\user rights assignment
from there I added the security group I had created in the "OU" to "log on terminal services" I also added the "administrators" group

I went in to the "OU" and added my test user to the security group I created that is linked to the policy.
I ran "GPUPDATE"
I still get the same message as before.

All I need is an OU with a group of users in it that can launch in app with the program path in the enviroment tab.
HELP PLEASE.

Answer : Local policy does not permit logon interactively with Terminal Services URGENT!!

If that doesn't work....then more than likely there is a domain policy that is overriding this local policy.  

From the terminal services machine....run the Resultant Set of Policy tool to see what policies are being applied to the machine. This is a great tool to help troubleshoot policy.

http://www.serverwatch.com/tutorials/article.php/2069021