there are many KB articles and some really good white papers on GP in the Microsoft Help and Support site for Windows Server 2003.
If your GPO is not applied to the OU container there could be different reasons for that. a block policy inheritance on the container, a no override, or the GPO isn't applied to a OU .
Here is one such KB http://support.microsoft.com/kb/885009/en-us
This is a link for MS white paper on GP using the GP mmc : http://support.microsoft.com/kb/818735/en-us
make sure the OU that you collect users into does not have block policy inheritance or the parent container does not block policy inheritance to child containers.
make sure that you log off and log on to refresh GP or use the refresh GP command at the command prompt. GP policies do not automatically take place and the GP default refresh interval is 90 minutes. [you didn't specify that you refreshed GP so that changes take place]