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WSUS can only be installed on a standalone server 2003 box or a server 2003 box that is a member of a domain. It can’t be installed on a domain controller and will just bring up an error at the end of the install saying it failed.

In case anyone has the same problem. I’ve finally found what was causing the HDD to be read every few secs on my server 2003 box. Single Instance Storage Groveler. It’s related to RIS. Stopping the service stops the drive doing the above. Now the DC is finally quite again.