fyi...i'm working as I go here
I also had to create a Group Policy for this setting to distribute to all TS users, otherwise it would only work on the account I set it on (ie Administrator)
If you want to know how to do the GP, let me know.
Karl,
I have just resolved a similar problem to this, I was getting the same error when running shortcuts from a redirected folder in Terminal Server.
Try Start -> Control Panel -> Internet Options, then click the 'Security' tab.
Click on 'Local Intranet' then 'Sites' and then 'Advanced'...
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