Hi Bob,
Some months ago I had similar problem trying to use Password Policy. I was using RHAS4 Up6, and my client machines was using RHES4 Up2, and for some unknown reason, no matter waht configuration I did, client machines did not recognizes ppolicy arguments sent from ldap server.
I just solved this situation doing some upgrade in client machines, from Up2 to Up5. After this upgrade, everithing was OK.
Did you try this client configuration in some other linux distribution ?
--- Gustavo Mendes de Carvalho email: gmcarvalho@gmail.com