AuthorizationManager check failed - SOLUTION!

I found a solution to the above problem first mentioned here today by pure chance. Since PowerShell is part of SQL Server 2008 (I think!), I decided to restart SQL Server 2008 on my machine when the error surfaced yet again today, as I was not in the mood for a reboot (too many open files & sessions).

Guess what, the error disappeared! So there must be some tight integration between SQL Server and PowerShell for this to be the solution. 

Please see this post for a repeatable solution.