Are you getting any errors in the event log? As I had a similar InGroup problem which was related to the Windows 2000 server config. I had the following Event Errors: 15, 534, 1000, 1053, 1789. Microsoft KB 262958 resolved them and the InGroup problem for me.

Also note that the older version of Kixtart (3.62) gave these Event errors but InGroup still actually processed properly. Whereas 4.2 gave the Event errors and did not process. If you find a fix, please post what it was! Rob