CPUU fails to update MAPI profile while all the credentials are specified properly (4218527)

The following errors can be traced in the CPUU log file:

2/5/2009 12:17:04 PM Core               [Trace]                     Started logging on to profile 'Outlook'.
2/5/2009 12:17:04 PM Core               [Trace]                             Calling MAPILogon procedure.
2/5/2009 12:17:07 PM Core               [Trace]                     Logging off from profile 'Outlook'.
2/5/2009 12:17:07 PM Core               [Trace]                     Started logging on to profile 'Outlook'.
2/5/2009 12:17:07 PM Core               [Trace]                     Pinging server 'TargetEX' for profile 'Outlook'...
2/5/2009 12:17:07 PM Core               [Trace]                     Ping result for packet 1: 'Reply from 172.18.5.98: time = 53 ms'.
2/5/2009 12:17:07 PM Core               [Trace]                             Calling MAPILogon procedure.
2/5/2009 12:17:10 PM SM                   [Warning]         Cannot open the message store 'Mailbox - User1'.

MAPI error.
Error code: 0x8004011d
Extended error description:
    Component:                 Microsoft Office Outlook Offline Folders
    Error description: The file C:\Users\User1\AppData\Local\Microsoft\Outlook\outlook.ost is not an offline folder file.
    Context:                     269353222
    Low level:                 0

GPO mandating all profiles to be OST is causing  such issue. During the process of switching profile EMWProf is creating TEMP target MAPI profile to read some settings. It must be non-OST - otherwise CPUU will fail to connect to the message store and will just end up with an empty OST file containing no information.

Please disable any GPO in the target domain that may enforce all Outlook MAPI profiles to be created as OFFLINE type - with OST file.