How exactly did you setup the repository on the server? Did you run createrepo on the downloaded packages, then serve it thru httpd?
How is the yum on the clients configured?
You gotta have the .repo file setup right.
Here's how mine sorta looks like:
Code:
[updateserver]
name=Red Hat Enterprise Linux Update Server
baseurl=http://192.168.1.10/yum/rhel5
enabled=1
gpgcheck=0