Several people have hit a problem while installing the service pack on Windows Server 2003 machines. The installation (that takes obscenely long time) eventually fails with a message:

Error 1718: The file xxxxxxxx.msp was rejected by digital signature policy.

Two things with repsect to that:

1) I had this problem and was eventually able to complete installation (on the second try). What has changed is that I moved the SP file from a network location to a local drive.

2) Take a look at the setup log. It can be found under %temp%\VS80sp1-KB918525-X86-Beta-ENU (this path can be pasted into Run box to open the folder)