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Source: Microsoft Support
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Consider the following scenario:
1. You disable Encrypting File System (EFS) on some clients from a Windows Server 2003-based machine by using a group policy from a policy level, such as an OU policy.
2. You disable EFS on these clients using another policy from a different policy level, such as local policy or domain policy.
3. You disable the defined policy on the OU level to enable EFS.
In this scenario, EFS is not enabled on these clients. The expected behavior is that EFS is enabled successfully.
You may experience the following additional symptoms:
1. A policy has a Data Recover Agent DRA defined but it is not applying.
2. Other settings in the policy apply successfully.
3. When you review the encryption details for a file you do not see the Data Recovery Agent listed.
4. When you look at the policy on Windows XP or Windows 2003 computer “Allow users to encrypt files using Encrypting File System (EFS)” is checked.
When EFS is disabled by a group policy, the registry value EfsConfigure is set to 1. When this policy is disabled, the value EfsConfigured is removed. It is not set to zero. If another policy applies to the computer that also disables EFS, the two policies cannot be properly merged because the EfsConfigured value does not exist.
The net result is that, once EFS has been disabled by Group Policy at one level, it cannot be re-enabled at that level if some other policy is also configured to disable EFS, regardless of the order of precedence for the policies.
Additionally, if EFS is disabled it cannot be re-enabled via policy from an Microsoft Windows XP or Microsoft Windows 2003 computer. There is a setting that has a checkbox that makes the admin think they are enabling EFS. (The setting “Allow users to encrypt files using Encrypting File System (EFS)”)
To work around the issue, you can use one of the method below:
1. Set the original policy to enable EFS and do not try to enable it in a second policy. 2. Push the registry value to clients by using scripts:
0 means that EFS is turned on and 1 means that EFS is turned off.
Vista or Windows 2008 - administrator can enable or disable EFS
XP or Windwos 2003 – can only disable EFS.
Note: If EFS has previously been disabled in the policy. Editing the policy on an XP or 2003 machine by checking the box to “Allow users to encrypt files using Encrypting File System (EFS)” will not have any affect. The setting will still be disabled even though the checkbox remains checked. Enabling EFS can only be accomplished via a Vista or 2008 gpeditor.
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