When you try to configure user settings within the group policy editor, for example the Internet Explorer Maintenance, settings are not applied. None of the configured settings are effective.
There are two solutions:
1. The domain user which you logon with is not in the OU to which the group policy is linked. Place the domain user in the appropriate OU the group policy is linked to.
2. If you do not want the domain user in the specific OU, then you have to enable the ‘loopback processing mode‘. This setting can be found in: Computer configuration / Administrative templates / System / Group Policy / User Group Policy loopback processing mode. Enable this setting and choose ‘Replace’ mode. More information: http://support.microsoft.com/kb/231287.
User settings are now applied.
What you have described is only for when you want to apply settings that require a user logon to be actioned on a machine regardless of which users logs in. I.E. create a logon script that is applied to a computer regardless of the user or OU that a user belongs to.
Generally the ‘merge’ option is used so the GPO’s specific to that user (i.e. mapped drivers, printer permissions etc) are not replaced but are merged with the user permissions configured for the particular machine or it’s OU.
For the title of your post when NO user policies are applied as seen by a red X in rsop see below link.
http://social.technet.microsoft.com/Forums/en/winserverGP/thread/262ae058-a775-4b33-ba85-1d657e8f0a61