The system was PHYSICALLY removed from the domain? Has it been removed via the OS yet? Basically, does the system know it's not on the domain? If you are still logging into an account that was used while it was on the domain, chances are it hasnt been removed from the domain. Group policy will apply if it is a domain account, regardless of physical connection to the network that the domain resides on. Try logging in as the local administrator and see if that alleviates the problem. If it does, you need to disjoin the machine from the domain through the computer name tab in the advanced system settings and stop using the domain level account to log in.
If it is physically off the domain, and you ARE using a local account to log on, and it still carries the group policy settings, not only would i be very surprised, but something is wrong.