Question : DNS recursive test query failed

I was asked to look at a network for a small business.  There are 20 clients running either Win98SE or XP Pro, and two machines running Windows 2K Server.  Internet connection is through a DSL line.  The DSL line goes to Server 1 and then to a hub, which the clients and the other server are connected to.  

Server 1
NISP 2004
602LanSuite 2004 internet proxy software

NIC 1(internal network)
IP: 10.0.0.1
DNS:10.10.0.1

NIC 2 (external)
IP:169.xx.xxx.xxx
DNS: automatic

P.P.P.o.E. adapter
IP: 68.xxx.xxx.xxx
DNS: automatic from ISP
         65.xx.xx.xx
         206.xxx.xxx.xxx  

Server 2
Domain Controller
DNS, AD, DHCP server
NIC
IP: 10.10.0.1
DNS: 10.10.0.1
(forwarders point to ISP DNS servers)

When testing Server 2, I can PING internal clients, but it cannot resolve external hostnames to IP address (i.e. www.google.com) using PING.  Also, the server will fail a recursive query to other DNS servers.  In addition, under the properties for the DNS server, it is unable to resolve to root hints server names to their IP address (m.root-servers.net to 202.12.27.33)

I am looking for suggestions on what could be wrong.  I appreciate any help on this.

Answer : DNS recursive test query failed

You could try setting server 1 in the Forwarders tab of your DNS config. That way anything unresolved (that it isn't authoritative for) will be passed onto that server.

Bit of a messy fix though.

Otherwise it has to be Server 1 blocking the traffic or not being happy with what is going through.