Windows 2008 Local Admin Account

Here is one way..

1) Login as Administrator or a user with Administrator rights
2) Launch “Local Security Policy”: Start > Administrative Tools > Local Security Policy
3) Expand “Account Policies”
4) Select Password Policy
5) Set Maximum Password age to “0”

I am logged in as a member of Local Admin group, and this option seems to be greyed out.

You are logged onto the server and are unable to change? What ID are you trying to have the password never expire? The local Administrator account to the server or an domain account with admin rights?

If its a domain admin account you will need to set that never to expire via Active Directory.

Need to change the local administrator's account to "never expire"
Loged in to the server as as a member of the Local Admin Group

But the account your are trying to change is the local admin account to the server. Login with that account and try what I posted. It seems that you admin account does not have rights to make policy changes on that server. See if the account itself can do it.

Is there a way to enable domain admins to make that change on the member server?

That is most likely going to have to be done VIA AD. Check the admin groups on the server, see which one has access. And if you are not part of the group have someone add you. You should at least be able to see that.

I would check with who ever manages this server. If your Admin ID does not have access, I am assuming they do not want anyone changing the policies on the server.

But this server is a member of the domain. And the loged in user is a member of the Local Admin group. I would assume that account can make this change,...

no, that is not always the case. Your elevated/admin ID may have admin privileges but limited access to a server.