GPOs linked to an OU will be inherited by child OUs. If the policy is linked at a parent level but does not apply, check to see if the OU Policies is marked "Block Policy inheritance"
Block policy inheritance
http://www.microsoft.com/technet/prodtechnol/windowsserver2003/library/ServerHelp/4e1b0b2b-6e88-4c7d-a848-f20f3b18660b.mspx
When the policy is not linked to the Policies OU, you can take a gpresult /v and examine the output.
You may seen an entry about policies not applied, and a corresponding reason. Usually it says "Unknown reason". A quick test on a virtual machine throws "Unknown reason" when we block policy inheritance.
-cp


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