Ping hostname works but nslookup to hostname doesn't

I have a Windows 2008 standard server which can ping by hostname and give me the proper IP address back however if I try to do an nslookup on the hostname I receive:

server: nmgdc1.nmg.local
Address 192.168.1.10
DNS request timed out. timeout was 2 seconds.
DNS request timed out. timeout was 2 seconds.
*** Request to nmgdc1.nmg.local timed-out

I can get to the website fine through a web browser and can do a successful nslookup from a different client. Any ideas?

As people have been pointing out your DNS server on 192.168.1.10 is not setup correctly or is not the right DNS server.

However the name can still be resolved by windows, probably using what is called NetBIOS over TCP/IP that works like an automatic DNS server system with auto server discovery on a LAN but doesn't scale well and is a bit hit and miss on it actually working.