Cross-VPS subdomain

Looks like this has been asked before, but it's not solving my problem in this case:

I have a Linode hosting one site. I have a second Linode which contains an application that I want to access through a subdomain of the domain of Linode 1.

Currently, I have created the A record for the domain on Linode 1 in the Linode DNS Manager, which points at the IP address of Linode 2.

I have also created an nginx vhost record for the subdomain:

server {
    listen   80;
    server_name beta.XXXX.com;
    access_log /srv/www/beta.XXXX.com/logs/access.log;
    error_log /srv/www/beta.XXXX.com/logs/error.log;

    location / {
        root   /srv/www/beta.XXXX.com;
        index  index.html index.htm;
    }
}

There is also a primary domain for Linode 2, which works fine (although currently it is disabled), and if I go to Linode 2's IP address, i get the default "nginx is working" page.

I have no reason to suspect that setting up the subdomain nginx vhost entry didn't work, as the error.log is blank.

However, I'm getting DNS failure when trying to connect to the subdomain. (i.e. page cannot be found)

Is there something i'm missing? Do I need to create a duplicate A record in the master zone for Linode 2 that matches the subdomain of the master zone for Linode 1? This is also the first time i've worked with nginx so is there something i'm missing there? A vhost ordering issue maybe?

Thanks.