The subject behavior can occur if the DNS server IP address is not properly configured on the client.

To fix the problem on the client:

1. Right-click My Network Places and press Properties.

2. Right-click Local Area Connection and press Properties.

3. Double-click Internet Protocol (TCP/IP).

4. Select the Use the following DNS server addresses radial button.

5. Type the proper DNS server address(es).

NOTE: An administrator may need to verify the DHCP scope that contains the correct DNS address(es).

You can use the Gpresult freeware to troubleshoot group policy issues. look for error 1789.