Why does Server display domain SIDs?

I have a win2k member server on a win2k network, that shows the domain users in the local groups as SIDs instead of the domain names. If I add a new domain user (which displays the user name) to a local group, it will add it unless it already exists. After closing the add members, and reopening it, the new member shows up as a SID.
I have tried clearing out the members and re-adding them, only to have them reappear as SIDs. How can this be fixed?