Windows – Setting Default Printer via Group Policy Preferences work is XP, not in W7

I have a mixed domain of Windows 7 and Windows XP computers, and a Group Policy to set printer settings based on the Computer being a member of a Security Group.

The group Policy has 2 preference entries for most printers:

A Create policy that creates each printer on the workstation
An Update policy that sets the default printer based on whether the Computer Name is in a particular Security Group, using "Item Level Targeting"

The policy completes without error and collecting the policy results show the correct default printer being applied. On the Windows XP computers, the policy works perfectly, but on the Windows 7 (32bit RTM) computers the first printer in the policy is always chosen as the default?

If I log in as an elevated user, the same thing still happens on the initial login, but running a GPUPDATE /FORCE on the machine will cause the correct default printer to be chosen.