Windows 7 Network Location bug

When deploying Windows 7 the Network Location dialog box is sometimes shown. This behaviour occurs even if the pc is part of the domain.

My enviroment had Windows 2008 R2 DC and Windows 7 fully patched and I would still get the error.

Microsoft has released a HOTFIX - KB 2028749

You will need to call Microsoft unfortunately for this fix. :(

This has also resolved the problem by applying a GPO.

Computer Configuration  > Windows Settings > Security Settings > Network List Manager Policies > All Networks.
Change Network Location to User cannot change location.