DNS is LIFE
Why isn't Group Policy Working on this client?
Did You Check the DNS Configuration of the Client?
One of the most frequently encountered problems with Windows 2000 and above is that things just 'stop working' when DNS gets out of whack. Specifically, if you're not seeing Group Policy apply to your client machines, make sure their DNS client is pointing to a Domain Controller or other authoritative source for the domain. If it's pointing to the wrong place or not pointing anywhere, Group Policy will simply not be downloaded.
As a colleague of mine likes to say, 'Healthy DNS equals a healthy Active Directory.'
Moreover, in the age of Windows 2003/2008 with its multiple forests with cross-forest trusts, Group Policy could be applying from just about anywhere and everywhere. It's more important than ever to verify that all DNS server pointers are designed properly and working as they should. For instance, if clients cannot access their 'home' Domain Controllers while leveraging a cross-forest trust, they won't get Group Policy.
Finally, to put a fine point on it, DNS leverages only the fully qualified name. It's not enough to verify that you can resolve a computer named xppro1 as opposed to xppro1.corp.com. The first is actually the NetBIOS name and not the fully qualified domain name. The second is the fully qualified domain name. If you find yourself in a DNS resolution situation where resolving the NetBIOS name will work, but the fully qualified name will not work, then you have a DNS problem that needs to be addressed.