Per Websense Global Technical Support - Case Number:01892517
If you Add a new Policy, and specify an existing Policy as a Template, the File Blocking Settings are not created correctly on the new Policy, and you are left with un-usable policy.
I am told that by design if the file type has been applied to any groups/users, then the related file type will not be cloned/copied because the User/Group can only be registered in one Policy. This results in a policy where you can no longer access the file type and there is no way to reset it so policy is unusable.
I would suggest that when copying the policy then the File Blocking section should just drop out the group references and leave you with the default settings in a similar fashion to how the exceptions are handled on the Web Policy and Application Control pages.