We are using SmoothWall UTM-308 as the L2TP vpn gateway. It pulls the proper ip and updates the dns server.
The client a windows xp sp3 machine using the built in vpn client from microsoft. We have setup manual dns and wins ips in the connection.
When I use nslookup it pulls the dns server from the network connection a 192.168.1.* and not the vpn connections 10.*.*.*, since we are using two dns servers (internal and external) for the domain it is not pulling the right ips. It is using the lan dns to query the dns and it returns a external ip, and not the internal dns on the vpn connection.