GPO not being applied

I have 2 Win 2k machines that are identical spec and setup. I'm using Active Directory in Hybrid mode. If i create a Group Policy to lock down the desktop it works on one PC but not the other - nothing appears to be applied at all. I've tried using SECEDIT to force a refresh, rebooted many times, reapplied SP2 all to no avail. The only differance i can think of is the PC that doesnt work was built pre-Active Directory. I've tried deleting the machine from the domain and re-adding. I'm using one particular user id to test with ...