Event 4098, can't install printers through GP Preferences on

[guest]

We use the GP Preferences to install shared printers on our client computers. On some of the computers not all the shared printers are installed through the GPP. When I check the log I get the following error:
Event Type: Warning
Event Source: Group Policy Printers
Event Category: (2)
Event ID: 4098
Date: 2009/09/25
Time: 8:34:07 AM
User: NT AUTHORITY\SYSTEM
Computer: computername
Description:
The user 'printer' preference item in the 'Information Systems Settings {3FABC171-BB2D-482A-911C-B0D11D227D8B}' Group Policy object did not apply because it failed with error code '0x8007007b The filename, directory name, or volume label syntax is incorrect.' This error was suppressed.
For more information, see Help and Support Center at http://go.microsoft.com/fwlink/events.asp.

"The filename, directory name, or volume label syntax is incorrect" doesn't make sense. We install 6 printers through the GPP and maybe 2 of the printers won't install. We use the following naming syntax:
"WCP 7345 - Building 1, copyroom"
"WCP 7345 - Building 1, copyroom watermark"
"WCP 7345 - Building 1, copyroom duplex"
"WCP 7345 - Building 2, copyroom"
"WCP 7345 - Building 2, copyroom watermark"
"WCP 7345 - Building 2, copyroom duplex"

On some of the client computers it's "WCP 7345 - Building 1, copyroom" that doesn't work and on others it's "WCP 7345 - Building 2, copyroom watermark" or "duplex". It's not always the same printer that's the issue.

I have tried adding the "Manage Printers" permission to the printers and that will work on some of the computers, but not on all. If it works with the "Manage Printers" permission I can remove the permission after a succesfull printer installation and it will continue to work...... STRANGE!!!
We are using Server 2008 SP2 32bit and XP SP3.

[guest]

First of all, the "Logging and Tracing" now works. I changed the destination back to the original, so it now points to "%COMMONAPPDATA%\GroupPolicy\Preference\Trace\". I have been through the log files and all I can see is the same as the Event Viewer already tells me.

Since I last wrote I have seen the problem a couple of times. I think I have narrowed it down to be because of the settings made in "Printing Defaults" on the individual printer.
Yesterday one of our users had the problem with the following printers:
"WCP 7345 - Building 2, copyroom"
"WCP 7345 - Building 2, copyroom watermark"
"WCP 7345 - Building 2, copyroom duplex"
I got it to work by removing the DRAFT watermark on the printer "WCP 7345 - Building 2, copyroom watermark" and suddenly all three printers was installed, I then added the watermark again and it still worked........

I don't know how to describe it but I think it has something to do with the Xerox printer and the "Printing Defaults" on the printers. I haven't seen the problem with our HP LaserJet printers, but that might be because we only have 4 and we have 10 Xerox printers.