What's happening during Applying Computer Settings

I see this message when my computer-specific group policy settings are being applied. Some domains have really complicated policies, and may make this process take a long time.

Also, some policies may require network access. In that case, if your computer has no network access, this may prolong the startup process too.

It is quite common for this problem to be DNS related. Make sure the clients DNS settings are correct. If you are on an active directory domain make sure your primary DNS server is set to the Domain Controller.

[Edit] See this link for further details on whats happening during this process and what problems can occur.

In addition to GP's, services start at that time, and most importantly, so does the network stack (it's a service, of course.) If the machine loses connectivity (or its NIC), everything breaks. This will present itself as a hung machine (which will respond, eventually, after 20 minutes.) This will for sure affect GP's. As others have said, GP's depend on a healthy network and DNS so troubleshoot that first.

On the other hand don't panic: It's normal for servers and domain controllers to take more time in this phase; SBS is famous for "slow" boot and shutdown times, but they're normal and there's nothing wrong.