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RSOP is the tool for viewing settings that are being applied to the computer and user from domain based Group Policy objects.
Your RSOP results show that the domain based Group Policy settings are in fact being applied to the computer.
The Local Group Policy editor is for viewing and configuring the Local group policy object and its settings, not for viewing domain based Group Policy settings.
Domain based Group Policies override Local Group Policy settings, they do not overwrite Local Group Policy settings.
When I run gpupdate, the User Settings are applied successfully, but I get an error when it tries to update Computer Settings. The following errors were encountered: The processing of Group Policy failed.
Windows could not obtain the name of a domain controller. Verify your Domain Name System (DNS) is configured and working correctly. What DNS errors would cause User Settings to be applied but Computer Settings to not be?
However, the Computer Settings are only being applied from the Default Domain Policy as reported by gpresult.
This is from a Windows Server 2008R2 Enterprise server, to Windows 7, SP1 Enterprise clients.
Here is the link to the output of What you're seeing is perfectly normal.
And how come Default Domain Policy GPO is not experiencing these problems?
It sounds to me like your clients aren't using your DCs as their DNS servers.