Ben,

Have you tried from another workstation connecting to the c$ drive using the 
local system credentials.  This is assuming that its not a DC.
net use z: \\servername\c$ /user:%computername%\localadminacct

If this works and it should since its a network login not a local login, open 
the mmc and connect to the computer management on that machine.  Go into local 
users and groups and remove authenticated users and interactive as users.  This 
will make the administrator account effectively not a "USER"
You should be able to log on locally afterwards.

I know this worked for me on a 2k server.  Not sure if it changes things for 
2k3.
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