I was able to successfully get this to work by doing nothing more than 'enabling' the "Interactive logon: Do not require CTRL+ALT+DEL"
When I tried a simple Execute task, with the option to use Any desktop, using a credential that has the 'local login' and 'load user profile' checkboxes enabled, it worked.
Prior to changing our group policy for my machine, I was getting the same error as you.
If I change it back, so the CTRL+ALT+DEL is required again, it fails.
Brian
Did you have to restart the server after changing the "Interactive logon: Do not require CTRL+ALT+DEL" setting?
Without a restart right now I have the same issue as before no matter if I enable or disable that setting.
Here's a full list of the Local Policies > Security Options:
Policy Security Setting
Accounts: Administrator account status Enabled
Accounts: Block Microsoft accounts Not Defined
Accounts: Guest account status Disabled
Accounts: Limit local account use of blank passwords to console logon only Enabled
Accounts: Rename administrator account Administrator
Accounts: Rename guest account Guest
Audit: Audit the access of global system objects Disabled
Audit: Audit the use of Backup and Restore privilege Disabled
Audit: Force audit policy subcategory settings (Windows Vista or later) to override audit policy category settings Not Defined
Audit: Shut down system immediately if unable to log security audits Disabled
DCOM: Machine Access Restrictions in Security Descriptor Definition Language (SDDL) syntax Not Defined
DCOM: Machine Launch Restrictions in Security Descriptor Definition Language (SDDL) syntax Not Defined
Devices: Allow undock without having to log on Enabled
Devices: Allowed to format and eject removable media Not Defined
Devices: Prevent users from installing printer drivers Enabled
Devices: Restrict CD-ROM access to locally logged-on user only Not Defined
Devices: Restrict floppy access to locally logged-on user only Not Defined
Domain controller: Allow server operators to schedule tasks Not Defined
Domain controller: LDAP server signing requirements None
Domain controller: Refuse machine account password changes Not Defined
Domain member: Digitally encrypt or sign secure channel data (always) Enabled
Domain member: Digitally encrypt secure channel data (when possible) Enabled
Domain member: Digitally sign secure channel data (when possible) Enabled
Domain member: Disable machine account password changes Disabled
Domain member: Maximum machine account password age 30 days
Domain member: Require strong (Windows 2000 or later) session key Enabled
Interactive logon: Display user information when the session is locked Not Defined
Interactive logon: Do not display last user name Disabled
Interactive logon: Do not require CTRL+ALT+DEL Enabled
Interactive logon: Machine account lockout threshold Not Defined
Interactive logon: Machine inactivity limit Not Defined
Interactive logon: Message text for users attempting to log on Not Defined
Interactive logon: Message title for users attempting to log on Not Defined
Interactive logon: Number of previous logons to cache (in case domain controller is not available) 10 logons
Interactive logon: Prompt user to change password before expiration 5 days
Interactive logon: Require Domain Controller authentication to unlock workstation Disabled
Interactive logon: Require smart card Disabled
Interactive logon: Smart card removal behavior No Action
Microsoft network client: Digitally sign communications (always) Disabled
Microsoft network client: Digitally sign communications (if server agrees) Enabled
Microsoft network client: Send unencrypted password to third-party SMB servers Disabled
Microsoft network server: Amount of idle time required before suspending session 15 minutes
Microsoft network server: Attempt S4U2Self to obtain claim information Not Defined
Microsoft network server: Digitally sign communications (always) Enabled
Microsoft network server: Digitally sign communications (if client agrees) Enabled
Microsoft network server: Disconnect clients when logon hours expire Enabled
Microsoft network server: Server SPN target name validation level Not Defined
Network access: Allow anonymous SID/Name translation Disabled
Network access: Do not allow anonymous enumeration of SAM accounts Enabled
Network access: Do not allow anonymous enumeration of SAM accounts and shares Disabled
Network access: Do not allow storage of passwords and credentials for network authentication Disabled
Network access: Let Everyone permissions apply to anonymous users Disabled
Network access: Named Pipes that can be accessed anonymously ,netlogon,samr,lsarpc
Network access: Remotely accessible registry paths System\CurrentControlSet\Control\ProductOptions,System\CurrentControlSet\Control\Server Applications,Software\Microsoft\Windows NT\CurrentVersion
Network access: Remotely accessible registry paths and sub-paths System\CurrentControlSet\Control\Print\Printers,System\CurrentControlSet\Services\Eventlog,Software\Microsoft\OLAP Server,Software\Microsoft\Windows NT\CurrentVersion\Print,Software\Microsoft\Windows NT\CurrentVersion\Windows,System\CurrentControlSet\Control\ContentIndex,System\CurrentControlSet\Control\Terminal Server,System\CurrentControlSet\Control\Terminal Server\UserConfig,System\CurrentControlSet\Control\Terminal Server\DefaultUserConfiguration,Software\Microsoft\Windows NT\CurrentVersion\Perflib,System\CurrentControlSet\Services\SysmonLog
Network access: Restrict anonymous access to Named Pipes and Shares Enabled
Network access: Shares that can be accessed anonymously Not Defined
Network access: Sharing and security model for local accounts Classic - local users authenticate as themselves
Network security: Allow Local System to use computer identity for NTLM Not Defined
Network security: Allow LocalSystem NULL session fallback Not Defined
Network security: Allow PKU2U authentication requests to this computer to use online identities.
Not Defined
Network security: Configure encryption types allowed for Kerberos Not Defined
Network security: Do not store LAN Manager hash value on next password change Enabled
Network security: Force logoff when logon hours expire Disabled
Network security: LAN Manager authentication level Not Defined
Network security: LDAP client signing requirements Negotiate signing
Network security: Minimum session security for NTLM SSP based (including secure RPC) clients Require 128-bit encryption
Network security: Minimum session security for NTLM SSP based (including secure RPC) servers Require 128-bit encryption
Network security: Restrict NTLM: Add remote server exceptions for NTLM authentication Not Defined
Network security: Restrict NTLM: Add server exceptions in this domain Not Defined
Network security: Restrict NTLM: Audit Incoming NTLM Traffic Not Defined
Network security: Restrict NTLM: Audit NTLM authentication in this domain Not Defined
Network security: Restrict NTLM: Incoming NTLM traffic Not Defined
Network security: Restrict NTLM: NTLM authentication in this domain Not Defined
Network security: Restrict NTLM: Outgoing NTLM traffic to remote servers Not Defined
Recovery console: Allow automatic administrative logon Disabled
Recovery console: Allow floppy copy and access to all drives and all folders Disabled
Shutdown: Allow system to be shut down without having to log on Disabled
Shutdown: Clear virtual memory pagefile Disabled
System cryptography: Force strong key protection for user keys stored on the computer Not Defined
System cryptography: Use FIPS compliant algorithms for encryption, hashing, and signing Disabled
System objects: Require case insensitivity for non-Windows subsystems Enabled
System objects: Strengthen default permissions of internal system objects (e.g. Symbolic Links) Enabled
System settings: Optional subsystems
System settings: Use Certificate Rules on Windows Executables for Software Restriction Policies Disabled
User Account Control: Admin Approval Mode for the Built-in Administrator account Disabled
User Account Control: Allow UIAccess applications to prompt for elevation without using the secure desktop Disabled
User Account Control: Behavior of the elevation prompt for administrators in Admin Approval Mode Elevate without prompting
User Account Control: Behavior of the elevation prompt for standard users Prompt for credentials
User Account Control: Detect application installations and prompt for elevation Enabled
User Account Control: Only elevate executables that are signed and validated Disabled
User Account Control: Only elevate UIAccess applications that are installed in secure locations Enabled
User Account Control: Run all administrators in Admin Approval Mode Enabled
User Account Control: Switch to the secure desktop when prompting for elevation Disabled
User Account Control: Virtualize file and registry write failures to per-user locations Enabled