This is a classic symptom of having both internal and external DNS entries
in the TCP/IP configuration of the machine.

Ensure that ONLY the internal DNS entry is in the TCP/IP properties of all
XP client machines.

Since you said that you are receiving the IP info from DHCP, ensure your
DHCP server is configured to pass out ONLY the internal DNS IP to the client
(may be the DHCP server itself if it is running your internal DNS).

Specifically, ensure that you are not using your ISP provided external DNS
server in the client's configuration.

-Frank

This can easily happen if you have a DNS server in TP/IP properties, that
does not support the local domain, such as your ISP's DNS.
The DNS Client service will stick to the last DNS server that gave it an
answer, for up to 15 minutes, or until the TCP/IP stack has been reset. So
if you have your local DNS in the preferred position and your ISP's in the
Alternate position, and your local is slow to respond (+1 Second), it will
ask the ISP's DNS, if it answers one way or they other (positive or
negative) the DNS client service will move the ISP's DNS to the preferred
DNS for 15 minutes and all subsequent queries for your local domain will
fail because your ISP's DNS cannot know, or should not know, anything about
your local domain, except that it does not exist.
Solution, don't use your ISP or any other external DNS that doesn't know
your local domain, in any position, on any interface, of a member of your
local domain.