Have you made sure "Apply Group Policy" is checked? It is not, by default. I don't have a 2K/ADS computer in front of me, so I cannot recall the exact layout of the dialog, or the exact names of the buttons, but on the main group policy window (after you right-click on the OU and select Properties|GPO) there are buttons for "New", "Edit" and so forth. One of these -- is it "Options" -- gets you to a permissions type of dialog in which you see the groups and permissions set for the GPO. For the users or group that you want the GPO to apply to, you have to check "Apply Group Policy."