Urgent Group Policy Issue - not applying despite saying it does

Question

Thank you for this urgent help. Auditors checking this out tomorrow morning.
We have a GPO that sets the eventlog audit settings for success or failure security events. The scope is set to Authenticated Users.
When I run the group policy wizard in GPMC it shows the settings applying to one of our servers in that OU.
When I run gpresult/z from that server it shows the policy applying to that server.
But when I go into gpedit.msc the security audit settings are all set to "not defined" and they are grayed out so I can't edit them manually.
As a test I set the GPO to deny applying to that server. I ran gpudpate/force on the system and then gpresult and it shows the GPO now not applying. But the settings are still set to not defined and still not editable. they are not being set by any other GPO.
In the event logs I only see three GPO errors but they are unrelated. A separate GPO is having issues creating user accounts. No other GPOs apply.
Quick help would be fantastic.
Server runs on Windows Server 2008 R2 (I can edit GPO but not the domain ones and I don't have access to the domain controllers).

Answer 1

OK, After several hours I figured it out. Turns out there's bugs and odd functionality.
If someone ever tested the 'advanced audit settings' (which I did in the same GPO at some point) then it sets a registry key to disable the use of the older basic audit settings. But when you stop using those advanced settings in your GPO it doesn't remove
that registry bit. So I used the GPO to undo that setting. This was the first step. This is found Computer Configuration > Windows Settings > Security Settings > Local Policies > Security Options > "Audit: Force audit policy subcategory
settings (Windows Vista or later) to override audit policy category settings" to DISABLED.
Even though this is done, sometimes the GPO files on the domain controllers don't remove the old audit settings. So in the comments of another thread I found out you may have to go to
\\domain-fqdn\SYSVOL\domain-fqdn\Policies\{your-policy-id-where-this-setting-was-originally-set}\Machine\Microsoft\Windows NT\ and delete the Audit folder which is left behind due to some odd bug. If you don't do this even after doing the next step the
next gpupdate will bring that security setting above back down.
Next you have to reset your audit settings on your PC to the defaults. Unfortunately there is no way to do this. Auditpol /clear does not accomplish this. The only way to do this is to take the audit settings from another working system, export them and
then 'restore' those same settings to the affected server. To do this:
1. On 'working system' run cmd.exe as administrator and export the audit settings to a folder like this:
auditpol /backup /file:c:\working-auditpol-settings.txt
2. Copy that file to the broken system such as the C:\ drive and run this on the broken system:
auditpol /restore /file:c:\working-auditpol-settings.txt
Open GPEDIT.MSC and verify the audit settings are back to normal. Computer Configuration > Windows Settings > Security Settings > Local Policies > Audit Policy
Then run gpupdate/force on the formerly broken system. Close gpedit.msc and reopen and verify the settings were not overwritten. If you skipped the sysvol audit folder deletion step they may come back.
Hope this helps someone.