When it comes to setting up a Remote Desktop Host, once you got it running the first thing you will want to do is lock it down.
The issue can be though when you start designing the sites group policy is that what works for a workstation may not work for a desktop host, this is where loopback processing comes in to it.
This setting tells the device how to manage the user and computer polices that are assigned respectively.
The quick answer is to use Replace as this will tell the device to ignore group policy's assigned to user account and only apply polices assigned to the computer account when a user logs in.
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