WSUS installation failures have been reported on some OEM preconfigured SBS 2003 systems. Investigation into this issue has uncovered the following problem:
During the SBS OEM mini setup the domain name is entered by the customer and added to the AD. This property is set in the AD as lowercase. During WSUS installation, the instance of WMSDE is set to case sensitive. During the setup process an attempt is made to give access to a security account which fails because it can't find the account in the AD. The check is doing a case sensitive check (since the instance of WMSDE is set to case sensitive). Since the AD has the domain in lower case and the process is looking for an upper case entry, it fails. Example: Setup process is looking for SJMPC\IWAM_DELL-OFV7446Y6N , but the AD shows sjmpc\IWAM_DELL-OFV7446Y6N , since the instance is case sensitive, the install fails.
To work around this problem, use the following special procedures for downloading the WSUS installer file, extracting WMSDE from the WSUS installer file, installing WMSDE from the command line, and then installing WSUS. The proceedure steps are documented on the WSUSwiki under SBS issues here: http://www.wsuswiki.com/WSUSonSBS