Group Policy is a very mature technology and it works near 100% of time. Recently I had one of these rare case when there were Group Policy issues.
The policy was removed from computer but the settings were left on the computer, gpupdate /force also did not help.
The solution was to clear local computer GPO cache. To do that, first you need to run Powershell as administrator and then execute this command:
Remove-Item "$env:windir\system32\GroupPolicy" -Force -Recurse