If you're going to have a schedule on it, why not make it a system
service? From that level you can have it run what ever you need to
running as the system account, just make sure you specify it can
interact with the desktop.
Luckily the security schemas, to my understanding and experience, are
pretty similar on 2K and 2K3. Are you testing this from scheduled
tasks or are you running it directly? If you are running it directly,
try setting it up like you would have it in production. I know you are
trying to find the reason things are not executing, but if you can
narrow down when and where this happens (Running Directly, running on
Scheduled Tasks, or both) it may shed some light on the cause of the
permission issues.
Randy