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Users cannot add printers on a mixed Windows 2003 & 2008R2 AD environment

Standard users in my windows domain are "restricted users". They cannot install software.
I have modified a global Group Policy to allow the installation of printer device drivers and to not to deny the installation of printers to users, but I still get the error about permissions when trying to add a printer as a regular user. Administrator, no problem.
Users can see the AD listed printers.
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NJComputerNetworks
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"but I still get the error about permissions when trying to add a printer as a regular user"  what is the exact error?
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Current error:
"A policy is in effect on your computer which prevents you from connecting to this queue. Please contact your system administrator."

The printer queue in question is on a Windows 2008 R2 server.
The policies I modified to allow regular users was using the Windows 2008 R2 GPMC.

Previously, the error was like "You do not have permissions to perform this operation" or the like.
I realize the error references a GPO but other than the current 3 policies I have in place (I will list them shortly in another post) I haven't been able to identify others that affect "adding printers". There are other two though about internet printing, which I haven't touched.
Just something I found relating the error :  http://support.microsoft.com/kb/888046
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What order is the policies applying?

Please post gpresult.
Here are some screenshots from GPOs.
GPOappliedToPC.png
ComputerGPOsettings.png
UserGPOsettings.png
Create an OU deny all GPO see if a user can install a printer.
End user: Windows XP
Printer Queue: Windows 2008R2
Domain Controllers: Win 2003 and Win 2008R2

I continued to get the same error message after adjusting/reapplying the GPO's.

-> Recreating the printer queue resolved the issue.
The document links where helpful and allowed me to confirm my GPO settings but the solution was to recreate the printer queue (same drivers).