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SBS 2003 migration to SBS 2011 - NTDS SDPROP error

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Hi, I am trying to upgrade from SBS 2003 SP2 with Exchange sp2, to SBS 2011.

I prepared using: http://technet.microsoft.com/en-us/library/gg563799.aspx

I installed all updates (other then IE 8) and I've rebooted many times.

Download BPA v2 and this comes up with Error can't find "MyBusiness OU not found on Windows sbs sever"

This did already exist in AD Users & Computers with all sub groups (originally created by SBS install),

but I followed listed article 2578426, I renamed existing OU and created items again clean (using exact same case & structure as aritcle).  

Ran 2011 migration wizard and it stops with same "MyBusiness OU not found" error and no other issuses / warnings.

The server has been running slow but the event logs are clean except when I run 2011 migration wizard, I get...

Directory Services Event ID: 1025 NTDS SDPROP Internal Processing

The security descriptor propagation task found an incorrect or missing object class for the following object. 
Object:
CN={62FBB3C8-1E23-484C-BA5E-ABB3CC4AEA8B},CN=Policies,CN=System,DC=Nemco,DC=Local 
Security descriptor propagation will not take place on this objects child objects. 
Additional Data Error value: 20b3 The specified class is not defined.

I checked ADSI Edit and clicking on CN=Policies,CN=System,DC=Nemco,DC=Local

AdsiEdit says "An operations error occured" and item appears blank.

Does this related to Group policy ?  I have no group policy on MyBusiness OU

Please help, any ideas how to correct problem and move on with migration ?



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