I found a very good work around and have it installed on 2003 server. Now there still remains the problem of 100% CPU. My server is no slouch either, 3200+/1.5gig ram, but that CPU at 100% bothers me.
People at planetdoom, rage3d and driverheaven are saying it's a heat issue, whats been most effective for those concerned, is too underclock your video card, the problem seems pretty consistant with the 9800 line of cards but affecting the XT owners just a little more than others.
It doesn't default to the first driver letter, the default is the drive it's installed from, maybe you have alcohol, blindwrite, Nero or clonecd installed, something that uses a virtual drive, you might want to un-install that