The subject behavior may occur on computers that use a high-availability configuration, like a SAN or NAS or a Cluster or NLB, because the Partition Manager disables access to redundant multiple paths and fails to communicate this to Setupdd.sys, the text mode Setup program.

To workaround this behavior, install Windows Server 2003 from a slipstream that includes SP1 (Windows Server 2003 Service Pack 1).