Please try the below provided workaround and update if the issue is
getting fixed.
Workaround :
The issue is caused by incorrect value introduced into
the registry at the following location:
[HKEY_USERS\S-1-5-18\Software\Microsoft\Windows\CurrentVersion\Explorer\User
Shell Folders]
"AppData"
This “AppData” location should be
“%USERPROFILE%\AppData\Roaming. However on the machine where this bug repro’s
this value is set to: “%APPDATA%”.
This creates a sort of infinite loop and end result is
CSIDL_APPDATA, and %APPDATA% are no longer defined for system account and App-V
connect fails.
Here is also a KB article which addresses similar
issue for current user.
http://support.microsoft.com/kb/886549
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