Unable to edit user rights - get Extended Error - Failed t..

Archived from groups: microsoft.public.win2000.security (More info?)

Running Windows small business server 2003. Single domain, working on
the domain controller.

When I try to change any settings in the GPO I get the following error
message:

An extended error has occurred. Failed to Save
\\<domain>\sysvol\<domain\policies\{key}\Machine\Microsoft\Windows
NT\SecEdit\Gpttmpl.inf

I searched groups for this and found a similar thread which pointed
towards checking that the DFS client was enabled. It is.

When I check the error log I see an error: "Windows cannto query for
list of Group Policy Objects. Check error log...etc". But I cant see
any error that might be relevant.

I have no clue what to do next. Any help most welcome!