First issue was an error when trying to launch the setup program: "The System Administrator has set policies to prevent this installation." Hm. I'm the system administrator, and I don't recall setting any such policies.

Happily, Jason Boche -- a VMWare Virtualtization Evangelist -- wrote a blog entry which explained a simple fix. Apparently this is part of Windows 2003's new "high security" mode, and I suppose I can't fault Microsoft for it... much.

Jason's solution is thus:

1. Click Start
2. Click Run
3. gpedit.msc <enter>
4. Drill down to Computer configuration
   1. Windows Settings
      1. Security Settings
         1. Software Restriction Policies
5. Right click Software Restriction Policies
6. Choose Create New Policies
7. On the right hand side, right click Enforcement
8. Choose Properties
9. Down below, choose All users except local administrators
10. Click OK
11. Close Group Policy
12. Open a Command Prompt
13. Run the command gpupdate /force <enter>
14. When local group policy is finished updating, re-run the VMware Server 2.0 setup

Worked like a charm. Thanks, Jason!

Second up was once the install started running, I got stymied with "Error 1718: File c:\windows\installer\randomstring.msi was rejected by digitial signature policy."

According to Shawn Bass' blog, there's an issue with the WIndows Installer engine and big MSIs. Microsoft has made a hotfix availablewhich, after a reboot, took care of things.