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PSM Hardening fails when setting ACLs on the C drive, I was able to get around this by making it a non terminating error by altering the code in C:\program files (x86)\CyberArk\PSM\hardening\psmhardening.ps1, replacing "cacls $path /E /R $account" with "cacls $path /E /R $account /C"
Hardening got past the terminating error, but would sometimes turn off the services netlogin and workstation services on the PSMit was running against, which would cause login and remoting issues until discovered and turned back on.
The environment is Airgapped Windows 2016 servers.
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