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2008 Server Password Policy

To turn password complexity off in Windows 2008 Server or change other grayed out security options, follow these steps:

(1) run gpmc.msc (Group Policy Management)

(2) Expand your Domain

(3) Go to <Group Policy Objects> and select <Default Domain Policy>

(4) Expand: <Computer Configurations> <Policies> <Windows Settings> <Security Settings> <Account Policies> <Password Policy>

(5) Disable Password Complexity or change any other settings as desired.

(6) If your impatient you can force the update by running gpupdate /Force

This is the only way to disable Password Complexity in Server 2008. The
local Security Policy can not be used for changing Password Complexity
in Server 2008.