In addition to the subject behavior, you may receive and Access Denied when configuring the policy.
Normally, when you implement service security settings in Group Policy, the Everyone group is granted Full Control. If you remove the Everyone group, you may experience this behavior, specially if the System account and Service account are NOT granted Full Control.
To reset permission so that Group Policy can apply:
1. Open the Registry Editor.
2. Navigate to HKEY_LOCAL_MACHINE\System\CurrentControlSet\Services\<Service Key>\Security.
3. Delete the Security sub-key.
4. Exit the Registry Editor.
5. Shutdown and restart your computer.