Jason,
Those GPO settings are good, even if they're in a bad place. 
You do know that the default policies should not be changed, right? (MS best practice).
Still, that's a strange issue that it runs the .BAT but not the kix. Using the BAT file will help in diagnostics.. use the SET > env.txt, followed by DIR \\domain\NETLOGON >>env.txt. This will show the environment (netlogon first in path!) and verify the ability to read the netlogon share.
Glenn
_________________________
Actually I
am a Rocket Scientist!
