The other kids are probably afraid of the bully, too. That's why they comply with his orders not to play with your DS. I think the main problem is that one older boy, the 11 year old who is the "leader".

My brothers were bullied in a similar fashion when we were growing up. I'm sorry to say that it didn't stop until one of my brothers beat that kid to a bloody pulp in the high school parking lot. My mother was horrified, my brother was suspended and the vice principal congratulated my dad on having a son who "knows how to handle himself" <eyeroll>