This is from a script I compiled to do this for me automatically. Change "winnt" to "windows" for XP and above, but the script kinda tells the tale of what needs to be done.
#region --- Delete old GroupPolicy directories ---
DirRemove("C:\WINNT\system32\GROUPPOLICY",1)
DirRemove("C:\WINNT\system32\GROUPPOLICY.WKSCACHE",1)
DirRemove("C:\WINNT\SYSTEM32\GROUPPOLICY.WMORIGINAL",1)
#endregion --- Old GroupPolicy directories are removed ---
#region --- Remove Registry keys ---
RegDelete("HKLM\SOFTWARE\Novell\Workstation Manager\Group Policies\User")
RegDelete("HKLM\SOFTWARE\Novell\Workstation Manager\Group Policies\Workstation")
#endregion --- Registry Keys are removed ---
Basically you remove those directories (DirRemove) and then delete the registry keys (RegDelete) to relinquish control back to the local GPO.
Hope this is clear enough.