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This isn't a common WLM problem because this isn't a common operating system, Windows Server 2003 is not meant to be used as a client platform, doing so is inadvisable and a waste of an expensive software license, unless of course, you stole that...
Anyway, WS03 has more strict security policies, and these are most likely preventing the login. I'd suggest checking the security options for IE, as well as verifying there is nothing in your Security Policy (secpol.msc) that would prevent the login.
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