Sounds like you've only modified the GPO of the local computer on your DC -- this will not have the results that you're expecting.
What you want to do, well first is to download the GPMC (Group Policy Management Console), free download from MS, as it makes GP management much simpler.
http://www.microsoft.com/DownLoads/details.aspx?FamilyID=0a6d4c24-8cbd-4b35-9272-dd3cbfc81887&displaylang=en
Next, create an OU into which you'll eventually move all of your generic workstations' computer objects. Create and link a new GPO to that OU and configure the automatic updates as you have above. Finally, move a test workstation computer object in ADUC from the built in Computers OU to the new OU you've created here. Go to the test workstation and execute "gpupdate /force" at a CMD prompt. On the test workstation, you may also want to stop the "Automatic Updates" service and delete the "windowsupdate.log" in %systemroot% (C:\windows by default), restart the Automatic Updates service, and finally execute "wuauclt /detectnow" from CMD prompt. By deleting the windowsupdate.log, a new one will be created and it will be available and easier to use for further troubleshooting if necessary. Make yourself familiar with this log.
Once confirmed on your test workstation and it shows up on your WSUS management console, you can move additional computer objects to the new OU as applicable. I know of no way to automatically and globally execute either the GPUPDATE or WUAUCLT commands except by login scripts -- both of these processes happen automatically at timed intervals and if left alone, will happen automatically at some point, without you having to touch each workstation. So once your test is confirmed on your test workstations, you can simply move the rest of your workstations to the applicable OU and monitor your WSUS server and watch as the rest of the workstations appear over the next several to 24 hours as they perform their typical automatic gpupdate and wuauclt processes.
As I indicated in my last post, I will typically create an OU for my generic workstation objects which is configured to install updates nightly, then a separate Server OU and Server GPO configured to apply updates only once weekly. The GPMC makes this easy.
edited: just a couple things, clarity mostly