Windows – Local policy to disable 16-bit execution

You can't completely disable the taskbar through group policy, only severely limit it. Sounds like you need to configure your kiosks to use a custom shell.

I've heard a few people just create an empty .exe file and point their gpo to it and it essentially is like running a pc without explorer.exe running at all. You can then configure your app to start on bootup. However I'm guessing users would still be able to launch explorer.exe through windows key + R.

The GPO location you're looking for if you're using Server 2003 (not sure about 2008 R2 but it should be similar) User Configuration\Administrative Templates\System\Custom User Interface.

I came across a post awhile ago about this at superuser. Explains quite a bit of the process you'd need to go through.

https://superuser.com/questions/103521/disable-the-taskbar-in-windows-7

There are always way to hack around central policies if you have local admin access - at a minimum you can make your changes locally to the registry and hack the security settings so they can't be updated by the group policy agent - but it isn't the best way to go. I'll admit to doing it 10 years ago.. but really.. don't. There are unanticipated results in a lot of cases.

See this technet article. The order for policy application is effectively:

1. Local
2. Site
3. Domain
4. OU

Later policies will overwrite earlier ones.

Your best bet is to make a computer group and use that group to either exclude your custom computers from the password complexity policy or assemble a new policy that'll override these defaults, filtered to only apply to this group.