No, thats not quite right. As soon as you enter a valid 'ntp server' or 'ntp peer' command, the ntp process starts on the router, and is available for other devices to sync against.
Be careful with the 'ntp master' command. Its intended to let your router maintain a valid stratum level if you do not have ntp servers to sync against, or if you lose them temporarily. Its not a necessary command for your router to serve ntp to other devices.
The 'ntp peer' command is to sync with an ntp source at the same stratum level, and is usually set on both devices for bi-directional syncing. Usually you would have 2-3 internal ntp servers set up as peers, and those peers would each be synced to 2-4 unique outside stratum 2 servers. All internal devices would sync to two members of this peer group.
It looks from the output of your 'sho ntp assoc' that you are syncing to two outside servers, although you've synced to the stratum 1 device. So your router is set up correctly.
What are you trying to sync to the router? What is the output of their status, assoc, and peers commands?
Use the 'ntptrace' and 'ntpq' diagnostic programs from the xntpd daemons to check your router. These commands are included in most unix distributions. You can get the latest NT versions at: http://www.five-ten-sg.com/ Look for the 'NTP 4.1.71' link bottom left.
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