Downloaded them again. Unblock the file. Extracted it locally. Copied it over to the target system. Same error.
<parentCategory ref="Cat_SecGuide"/>
<supportedOn ref="windows:SUPPORTED_WindowsVista"/>
<elements>
<enum
id="CopyFilesPolicy_Enum"
valueName="CopyFilesPolicy"
>
<item displayName="$(string.CopyFilesPolicy_Disabled)">
<value>
<decimal value="0"/>
</value>
</item>
<item displayName="$(string.CopyFilesPolicy_ICMOnly)">
<value>
<decimal value="1"/>
</value>
</item>
<item displayName="$(string.CopyFilesPolicy_AllowAll)">
<value>
<decimal value="2"/>
</value>
</item>
</enum>
</elements>
</policy>
<!-- Enable Certificate Padding-->
<policy name="Pol_SecGuide_Certificate_Padding"
class="Machine"
displayName="$(string.Pol_SecGuide_CertPadding)"
explainText="$(string.Pol_SecGuide_CertPadding_Help)"
key="Software\Microsoft\Cryptography\Wintrust\Config" >
>
<parentCategory ref="Cat_SecGuide" />
<supportedOn ref="windows:SUPPORTED_Windows7" />
<enabledList>
<item key="Software\Microsoft\Cryptography\Wintrust\Config" valueName="EnableCertPaddingCheck">
<value>
<decimal value="1" />
</value>
</item>
<item key="Software\Wow6432Node\Microsoft\Cryptography\Wintrust\Config" valueName="EnableCertPaddingCheck">
<value>
<decimal value="1" />
</value>
</item>
</enabledList>
<disabledList>
<item key="Software\Microsoft\Cryptography\Wintrust\Config" valueName="EnableCertPaddingCheck">
<value>
<decimal value="0" />
</value>
</item>
<item key="Software\Wow6432Node\Microsoft\Cryptography\Wintrust\Config" valueName="EnableCertPaddingCheck">
<value>
<decimal value="0" />
</value>
</item>
</disabledList>
</policy>
</policies>
</policyDefinitions> 
Microsoft