Cannot add local domain to Local Intranet Zone

Ok, this is driving me crazy.

Just implemented DFS and with Folder Redirection for the Desktop folder.  Now, when a user clicks on a shortcut to open any application on the desktop, they are prompted with an "Open File - Security Warning" that says the publisher is unknown and prompts me to open or cancel.  

This SEEMS to be an issue with the local intranet security zone (as per MS KB 303650).  When I tried adding the local domain, "mydomain.local" on the very first system (XP SP2) to the list of trusted domains, it took.  For good measure, I added both servers in the DFS set.  No problem.  The prompt went away.  Tried on three other systems (only one I can confirm is XP SP3, the others are probably SP3) and I can't add them.  I'm told I must use an HTTPS:// prefix - but that checkbox is disabled.  Playing around, I can enter the servers - server1.mydomain.local, server2.mydomain.local, but I cannot enter just "mydomain.local" - I get the prefix error.

I tried the manual entry for the entire computer detailed in the KB (again 303650), but when I got down to adding the mydomain.local key, I got a registry error and couldn't write to the registry.

Any thoughts on how I can get this zone added to the computer?  Only \\mydomain.local\dfsshare works, \\mydomain\dfsshare doesn't work - I'll take that as a workaround (haven't spent any real time troubleshooting that part - DNS SHOULD be correct but I can double check...)