Joining XP Pro SP3 Workstation to SBS2008 Domain

I'm setting up my first SBS2008 network (after setting up loads of SBS2003 networks for years), and I can't seem to get any workstation to connect properly. It's as though the server isn't assigning a DHCP IP address to the workstations.

If I manually assign an IP to the workstation then I can ping the server, but only by IP, not name, even when using the server IP as the preferred DNS on the workstation.

As this is my first attempt at SBS2008, I installed everything as default. The server is an HP Proliant ML350 with 160GB HDD and 6GB RAM. Workstation is Intel Dual-Core 2.6Ghz, 2GB RAM, 320GB hard disk, with a fresh installation of XP Pro with SP3.

All the usual services appear to be running and I can't see anything obvious in the logs.

As I'm still finding my way around SBS2008 I'm hoping someone can show me the silly mistake I've made that is stopped this simple process working.

Below is the ipconfig /all from the server:

Windows IP Configuration

   Host Name . . . . . . . . . . . . : SERVER01
   Primary Dns Suffix  . . . . . . . : mydomain.local
   Node Type . . . . . . . . . . . . : Hybrid
   IP Routing Enabled. . . . . . . . : No
   WINS Proxy Enabled. . . . . . . . : No
   DNS Suffix Search List. . . . . . : mydomain.local

Ethernet adapter Local Area Connection:

   Connection-specific DNS Suffix  . :
   Description . . . . . . . . . . . : Broadcom NetXtreme Gigabit Ethernet
   Physical Address. . . . . . . . . : 18-A9-05-3E-14-AC
   DHCP Enabled. . . . . . . . . . . : No
   Autoconfiguration Enabled . . . . : Yes
   Link-local IPv6 Address . . . . . : fe80::85cc:7d83:4028:a51e%10(Preferred)
   Link-local IPv6 Address . . . . . : fe80::bf1a:44ee:119d:8bfa%10(Preferred)
   IPv4 Address. . . . . . . . . . . : 192.168.0.2(Preferred)
   Subnet Mask . . . . . . . . . . . : 255.255.255.0
   Default Gateway . . . . . . . . . :
   DNS Servers . . . . . . . . . . . : ::1
                                       127.0.0.1
   NetBIOS over Tcpip. . . . . . . . : Enabled

Tunnel adapter Local Area Connection* 8:

   Media State . . . . . . . . . . . : Media disconnected
   Connection-specific DNS Suffix  . :
   Description . . . . . . . . . . . : isatap.{E3CB938B-6156-4BC7-840D-E5A766857570}
   Physical Address. . . . . . . . . : 00-00-00-00-00-00-00-E0
   DHCP Enabled. . . . . . . . . . . : No
   Autoconfiguration Enabled . . . . : Yes

Thanks.