Target Group in WSUS does not get put into correct group on WU Server

I have a registry key that is setup to put the workstation in a specific group on the WSUS server.  However they still just show up in the "unassigned group" and do not automatically move into the correct group thats in the registry key.  Below is the reg key for reference.  Does anyone know a way for this to work?

Windows Registry Editor Version 5.00

[HKEY_LOCAL_MACHINE\SOFTWARE\Policies\Microsoft\Windows\WindowsUpdate]
"WUServer"="http://192.168.40.209"
"WUStatusServer"="http://192.168.40.209"
"ElevateNonAdmins"=dword:00000001
"TargetGroupEnabled"=dword:00000001
"TargetGroup"="Everything"

[HKEY_LOCAL_MACHINE\SOFTWARE\Policies\Microsoft\Windows\WindowsUpdate\AU]
"NoAUShutdownOption"=dword:00000001
"NoAUAsDefaultShutdownOption"=dword:00000001
"NoAutoUpdate"=dword:00000000
"AUOptions"=dword:00000004
"ScheduledInstallDay"=dword:00000000
"ScheduledInstallTime"=dword:00000006
"UseWUServer"=dword:00000001
"RescheduleWaitTimeEnabled"=dword:00000001
"RescheduleWaitTime"=dword:00000060
"NoAutoRebootWithLoggedOnUsers"=dword:00000001
"AutoInstallMinorUpdates"=dword:00000001
"RebootWarningTimeoutEnabled"=dword:00000001
"RebootWarningTimeout"=dword:0000001e
"RebootRelaunchTimeoutEnabled"=dword:00000001
"RebootRelaunchTimeout"=dword:000005a0
sunflower_itAsked:
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ChopperCenturyCommented:
Yes AD is needed for GPO to work.
Your registry entry is correct. Under the "Options" of the WSUS console there is a "Computers" section. There are two options, the first is default for automatic placement into the "Unassigned" group. You will need the second option, which allows for registry settings to be used.
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ChopperCenturyCommented:
Instead of manually building the reg key, the best solution for WSUS would be a Group Policy.
Client-side tracking will do the trick for placing PC's into the appropriate group of your choice.
Here is a useful link for configuring the GPO from start to finish..
http://technet.microsoft.com/en-us/library/cc708574.aspx
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sunflower_itAuthor Commented:
You need Active Directory to use Group Policy right?  We do not have an Active Directory server.
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