Ok, well according to Pervasive, only V8 is certified to work on W2K3. And I suspect that the backup software is what is causing folks headaches. Also, any of you that are using XP workstations should check to see if anyone has gone and updated them to SP2 as this can cause a variety of unexpected occurences.
Also another thing with the XP clients disconnecting, I had this same issue with my newest machine and my server. The ONLY way I was able to solve it was to hard code an IP address for it that is within the pool range the server recognizes and then point the DNS at my server with the gateway set to my router/firewall. Also had to play a bit with the forward and reverse lookup zones on the server.
Just some things to look for.....