Hello again

I was messing with my DNS settings today and wanted to migrate my network to use SME server to resolve hostnames, so I changed the router DHCP settings to point to my SME server for DNS resolution.
All is working, as I can ping outsite internet address, but for some reason, I can't ping .local address' from within my network.
If I do an nslookup from a client machine, it appears to have the information, but does not pass it though icmp or any other service.
From the Client:
nslookup joeman1.local
Server: 192.168.0.55
Address: 192.168.0.55#53
Non-authoritative answer:
Name: joeman1.local
Address: 192.168.0.55
However:
ping joeman1.local
ping: unknown host joeman1.local
From the server:
nslookup joeman1.local
Server: 192.168.0.55
Address: 192.168.0.55#53
Non-authoritative answer:
Name: joeman1.local
Address: 192.168.0.55
Although:
ping joeman1.local
PING joeman1.local (192.168.0.55) 56(84) bytes of data.
64 bytes from wolfserver.joeman1.local (192.168.0.55): icmp_seq=1 ttl=64 time=0.036 ms
64 bytes from wolfserver.joeman1.local (192.168.0.55): icmp_seq=2 ttl=64 time=0.060 ms
I am NO a DNS expert, but I think I have it all set up properly. Basically, I have domains and hostnames set up in server-manager correctly as I can tell.
This is a standalone server and DHCP is being provided from my Linksys router, but points to my SME server as its DNS choice for DHCP and my clients are receiving the information as noted in the /etc/resolv.conf from the clients.
Any thing else I can check or any additional information you need, please let me know.
BTW, I am using SME 8 Beta 5.
Thanks in advance!
Joe