Execution-Policy Error running Powershell Script in SQL Server Agent

The error you are receiving was actually noted in a connect item but Microsoft shows it as closed won't fix. What is missed in this connect item is the fact that the subsystem for SQLPS is set via a registry key. When and what actually sets this I do not know.

This registry key is found at the path below and on my local box is set to RemoteSigned. Now I do not generally advise changing registry keys but you can try changing this to RemoteSigned and you will likely find your scripts will run without error. It might require restart of SQL Agent service, don't know.

HKLM\SOFTWARE\Microsoft\PowerShell\1\ShellIds\Microsoft.SqlServer.Management.PowerShell.sqlps120

Now, with using Unrestricted you can actually cause scripts to receive a prompt when executing the PowerShell script. This may be what is actually generating the error because SQL Agent cannot respond to the prompt or does not know how to handle it. There is really no reason to use that policy setting as RemoteSigned is a sufficient policy to allow scripts you wrote and setup on the server to execute without being prompted.

I would except if you dug into the full error being returned it might contain text similar to the below message. This is the prompt you can receive when setting the execution policy to Unrestricted:

Security Warning

Run only scripts that you trust. While scripts from the Internet can be useful, this script can potentially harm your computer. Do you want to run

[D] Do not run [R] Run once [S] Suspend [?] Help (default is "D"):