Caching problems

[blks]

Recently I followed the How-to on setting up a caching DNS server. I am
using the 127.0.0.1 as Caching then the DNS servers of my ISP for primary
and secondary, I guess?!?! The problem I am having now is that when I try to
Telnet, ftp or send mail locally within my LAN (2 PC's and the Linux server)
The Linux Server doesn't respond, When I connect to the Internet, It works
great to send mail Locally, Telnet and FTP to the Linux Server (192.168.0.3)
What could be the problem? Is their a configuration I need to change?

Thanks to all who help