<p>You’re looking to change the password complexity setting you found in the “Default Domain Policy”, not the local group policy. Then do a “gpupdate” and you’ll see the change take effect.</p>
<p>Open Group Policy Management Console (Start / Run / GPMC.MSC), open the Domain, and right-click and Edit the “Default Domain Policy”. Then dig into the “Computer Configuration”, “Windows Settings”, “Security Settings”, “Account Policies”, and modify the password complexity requirements setting.</p>
<p>Editing the “Default Domain Policy” is definitely a quick-and-dirty thing to do. The better thing to do, once you get a better handle on group policy management, would be to return the default back to default settings and make a new GPO overriding the default with the settings you want. To get you by fast, though, editing the default isn’t going to hurt you.</p>