Although the password policy branch is available for all Group
Policy Objects it is only implemented for GPO's at the domain level so even if you make settings for a GPO for an OU or a site it will have no effect. The only
way to apply password settings is as follows:
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