Event 1504 Group Policy not applying

I have been trying for a few days now to troubleshoot a brand new PC
that is not getting group policy applied.

The affected computer is XP SP2 the domain is windows 2003


The event that shows up is 1504

I have verified the DNS is correct.

I do an nslookup and it resolves the server to the DC

I can manually connect the pc to \\fqdn\sysvol\fqdn

I have read that a having a Gig Nic Card can cause problems so I set
the registry to wait for GP to 200seconds
I have also loaded the latest nic drivers.

Rejoined the domain still get event 1504.

I also made sure file and print sharing was working and passing through
the firewall.

Any help greatly appreciated.

.