Hi 

I am trying to apply Group policy for WSUS. The group policy seems to be applying but the settings are not being applied. and the computer are also not being shown in the Group i created in WSUS Console( Same OU in active directory and Same group in WSUS console)

Please post the result of RSOP, and the settings of your gpo.

Furthermore, can you look for errors in "c:\Windows\WindowsUpdate.log".