2008 servers not taking Computer Policy from group policies

Got a strange problem, our 2008 servers are not taking group policy it seems, and when I run gpupdate /force I get this

“The processing of Group Policy failed. Windows attempted to read the file \\\SysVol\\Policies\{D07F80B7-6A6B-4C88-A1FB-28FEAB4CA197}\gpt.ini from a domain controller and was not successful. Group Policy settings may not be applied until this event is resolved. This issue may be transient and could be caused by one or more of the following:
a) Name Resolution/Network Connectivity to the current domain controller.
b) File Replication Service Latency (a file created on another domain controller has not replicated to the current domain controller).
c) The Distributed File System (DFS) client has been disabled.”

Going to the error logs shows the same error, and looking at the details tab shows that its ErrorCode 5, which is apparently access denied, however I can manually go to the GPO using the same credentials and even click on the link it gives me in the general screen of the error log and succesfully open the gpt.ini!

All our client workstations and Server 2003 machines are working fine, and I am at a loss. The User Policy seems to work fine as well.

Domain Controller is a 2008 SBS box with SP1.

Any ideas??