Using the Release 3.7 VPN Client, there is a parameter in the pcf files that controls whether the VPN Client allows the use of split DNS when connected. This value should default to 1, which means enabled. It currently defaults to 0, which makes
the feature appear broken. Setting it to 1 in the pcf allows split DNS to function.
This URL should help you:
http://www.cisco.com/univercd/cc/td/doc/product/vpn/client/rel401/401_clnt.htm