I’ve been messing around with Groove 2007 recently, and set up a SharePoint Files Tool in a Groove Workspace to synchronize files. I set this up AOK on a machine with a fresh copy of Groove, then proceeded to make a template of it to test the template feature. I tried opening a new workspace via the Launchbar, which worked, however when I tried to synchronize to the SharePoint document library, it created the folders, but failed on synchronizing the files. The fix was to exit out of Groove, then open it again. Upon further research, for some reason not all of the Groove functionality works on the first run of the product. You need to exit out of Groove entirely, then restart Groove, and everything should be AOK.