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Group Policy not updating on Domain Controllers of Windows 2003 Server and Windows XP client

I have a Windows 2003 Server envoirnment with two domain controllers. I am getting this error on all my servers and Windows XP clients when I change anything in the Group Policy and try to apply the change on any system by using the gpupdate command on the command prompt.

I have checked the DFS root and the permissions on it and Everyone Group has the read and execute permissions. There was one article wheck asked to check the registery and turn the DFS Client on on the system but I checked and I could not find any entry for the DFS Client in the registery.
I have tried to access the Sys Vol folder using windows explorer using dfs  where the policy is placed in the SysVol folder on the domain controller and the XP client machine and I can access the policy without any problems.
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Brian Pierce
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