WinXP using old DNS server IP even though changed in DHCP and on the box

We recently decommissioned an old Win2K3 DNS/DC server and replaced it with a new fancy Win2K8 DNS/DC server. Due to timing we didn't give the new DNS server the same IP address but added a new one.

The old DHCP settings were:
DNS1: OLDMachine
DNS2: Existing Machine

New DHCP settings are:
DNS1: NEWMachine
DNS2: Existing Machine

Some of the Windows XP clients are exhibiting strange behavior. We have done:
ipconfig /flushdns
ipconfig /release
ipconfig /renew
ipconfig /registerdns

and when we do

ipconfig /all

I see:

DNS1: NEWMachine
DNS2: Existing Machine

BUT when I do
nslookup foo

I get:
Nonexistent DNS server OLDMachine

followed by a successful reply by one of the existing DNS servers.

What gives? How is this old IP still stuck in XP even though I've forced it to have new ones, cleared out the DNS cache, and even restarted the machine???

I checked and the machine is set up for DHCP and there are no hard-coded DNS entries in the Network config (nor in the little Additional tab either).

EDIT – Also looking at the System log shows:
1054 – Description: Windows cannot obtain the domain controller name for the computer network. (The specified domain either does not exist or exist or could not be contacted). Group Policy processing aborted.

EDIT 2 – Possible solution yet it is still busted…

I changed the DNS servers by hand and noticed that they were being over-ridden. There's a stupid group policy (dunno why, but I'll leave it) that was forcing the DNS servers; changed it however the clients can't access the domain (since the primary DNS is down — why the hell won't windows try the secondary one that is working fine?!?!?)… So how can I force either a group policy override (so that the desktops can find the domain again) or somehow get the group policy back on their computers? Ugh…

(p.s. is it a good idea to have a forced DNS server policy in AD? It seems like that's the sole job of DHCP?)