Win2k3 DC, WinXpProsp3 client
Created the No Internet Policy on the DC to put in 127.0.0.1 for the proxy 
addresses.
Created an OU on the DC for No Internet
Applied the policy to the OU.
Moved user to the OU.
User still gets to the Internet even after a GPUPDATE /Force and reboot.
RSOP says two policies exist
No Internet (Higher)
Domain Default
GPResults show No Internet Not applying but nothing in the events (that I can 
see) on the client or the DC???
What gives???
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