Password policies assigned to an OU/site GPO do not work

Start the Active Directory Users and Computers MMC snap-in (Start - Programs - Administrative Tools - Active Directory Users and Computers)

Right click on the domain and select properties

Select the Group Policy tab

Select the domain group policy object and select Edit

Expand the 'Computer Configuration' branch - 'Windows Settings' - 'Security Settings' - 'Account Policies' - 'Password Policy'

You will now be able to set the relevant options

When complete close the Group Policy Editor