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Somehow my taskbar buttons dropdown is grayed out and is set to "never combine" in Windows 7. I want to set this to "Combine and Hide labels" but am not able to.

I've found out that the registry key is found under Software\Microsoft\Windows\CurrenVersion\Explorer\Advanced TaskbarGlomLevel but changing this and rebooting still does not work.

Any ideas?

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Solved. Turns out to be a domain policy that was set.

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It would have been more helpful if you posted WHERE in domain policy this was set. – Warren P May 14 '12 at 17:30

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