I'm no expert, but I believe the problem lies with you doing this:
" I've went back to each user (User2, User3, and User4) and removed the group "Domain Users" and "Group1" is the primary group."
There are permissions for group policies. By Default Domain Users have...
You don't have to set DNS to each other. In fact, that won't fix it.
What you DO need is an entry into the lmhosts file on each DC. If you've never worked in one, it is located in
%systemroot%\system32\drivers\etc.
You will find a sample already there. Just use the .sam file and save it as...
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