When using group policy to manage RMS templates the Office ADM files are not environment variable friendly. For instance a popular path administrators use is %localappdata%\Microsoft\DRM\Templates. However the default Office policy files do not properly expland the %localappdata% variable and the GPO setting does not work as expected.

The ADM files may be edited to handle environment varibles. Just add EXPANDABLETEXT to the appropriate file to enable this functionality. The ADM file to be edited is typically officexx.adm:

office12.adm

POLICY !!L_SpecifyPermissionPolicyPath
KEYNAME Software\Policies\Microsoft\Office\12.0\Common\DRM
    PART !!L_Enterpathtopolicytemplatesforcontentpermission TEXT
    END PART
    PART !!L_Empty EDITTEXT
        VALUENAME admintemplatepath
        EXPANDABLETEXT
    END PART
    EXPLAIN !!L_OfficeapplicationsusingIRMwillscanthepathprovidedtoseeifanyp
    END POLICY

office14.adm

POLICY !!L_SpecifyPermissionPolicyPath
    KEYNAME "software\policies\microsoft\office\14.0\common\drm"
    EXPLAIN !!L_OfficeapplicationsusingIRMwillscanthepathprovidedtoseeifanyp
 
        PART !!L_text42 TEXT
        END PART
        PART !!L_empty407 EDITTEXT
 
 
            VALUENAME "AdminTemplatePath"
            EXPANDABLETEXT
 
 
        END PART
END POLICY

The group policy settings are:

User Configuration\Microsoft Office 2007 system\Manage Restricted Permissions\Specify Permission Policy Path


User Configuration\Microsoft Office 2010 system\Manage Restricted Permissions\Specify Permission Policy Path


Further Information:

Thanks to Jason's blog for the insight.

 See Also