IP Masq question

[Lance Hoffmeyer <lanceh@ibm.net>]

I am trying to setup IP MASQ on a home network.  I am running Potato.  I have the server which we will call C1 and one client which we will call C2.  I have setup C1 for caching DNS.  I have also setup C1 for IP Masquarading.  I am having problems getting
C2 to connect to the internet using names such as 'www.debian.org' although it can connect with '209.81.8.242'.  This leads me
to believe that this is a DNS problem and not a IP Masq problem (correct?).  When I start 'nslookup' I get:

Default Server: localhost
Address: 127.0.0.1

and I can lookup domain names.  Now, according to the DNS HOWTO I have a properly functioning 'caching DNS'.  In my
'resolv.conf' file on C2 I have:

nameserver 10.254.2.1

which is the address for my server.

Why is my 'caching DNS' not working on C2? I am not certain what other information to include that might help in this
problem and I try to keep my emails short.  The only other information I can offer is that I can

Telnet and FTP from C1 to C2 but I can only
FTP and cannot Telnet from C2 to C1.

Any help would be appreciated.

Thanks

Lance