Computer Policies and User Policies

So when do they each apply?

Computer Policies are processed when your computer is started. Once your computer is switched on, started and the network connection is initialized, computer policy settings are applied and a history of the policies that were applied is written to %AllUsersProfile%\Ntuser.pol.

User Policies are processed when a user logs onto a computer. So when you logon using your username and password, the policy settings are applied and written to %UsersProfile%\Ntuser.pol.