Let me tell you how I setup and run time on my Domain controllers, they work without any problems. And the clients have no problem syncing up with them.
All machines go through these, what I call the "standard 4" lines from a command prompt:
sc stop w32time
#Stop the service
w32tm /unregister
# Clear the registry
w32tm /register
# Re-register
sc start w32time
# restart the service
This flushes out any time information they may have accumulated. Now that we have a clean slate to work with, I Set one DC as the primary time source. This is the machine that goes out on the internet looking for a time source to sync with, it then advertises as a reliable time source. (All other DC's in the domain sync with this DC and then advertise as well to their local clients.) The line you have above is pretty much the same line I use, but this only sets up the peerlist:
w32tm /config /update /syncfromflags:manual /manualpeerlist:"0.pool.ntp.org 1.pool.ntp.org 2.pool.ntp.org 3.pool.ntp.org"
Next I tell the DC to sync up and load in the correct time:
w32tm /resync /rediscover /nowait
And lastly, and this is where I think you are having trouble, I tell the DC to advertise on the network that it is a reliable time source:
w32tm /config /reliable:yes
All other DC's go through the same sequence, except for configuring the peerlist.
They go through the first four lines and get a clean slate, then they are instructed to sync up(they automatically know to sync with the primary DC) and lastly they are told to advertise as a reliable time source.
With this in place we turn to the clients.
First of all they must already be domain members, the DC will not respond to them if not. So join them to the domain if you haven't already.
They also go through the standard four and get cleared out.
sc stop w32time
w32tm /unregister
w32tm /register
sc start w32time
...and then you just tell them to sync up:
w32tm /resync /rediscover /nowait
They know enough to seek out a domain controller and get the correct time on their own.
Give them a couple seconds to sync up and then enter:
w32tm /query /source
They will tell you the name of the DC they are syncing with.
I think in your case, you didn't tell the DC to advertise as a reliable time source, so the clients couldn't find a reliable DC and therefore they run from CMOS.
Good luck.