Michael,
Without going to drastic actions like dumping your W2K Server, the answer to your question is :-
W2K Server Primary DNS Server = itself (ie. 127.0.0.1 or 192.168.0.1)
W2K Server Secondary DNS Server = can be blank or IP of SME server
W2K Workstations Primary DNS Server = W2K Server IP Address
W2K Workstations Secondary DNS Server = IP of SME Server
This assumes your W2K Server DNS is setup correctly. If it is not, you will have problems getting to the net.
You *could* just set the Primary DNS of all machines to the IP of the SME server as well. However, if your W2K server is doing more than just sitting there looking like an expensive paperweight, then I'd recommend the above settings.
Kelvin