I was just installing PowerShell on one of my Windows Server 2003 servers, when I encountered the error “You do not have permission to update Windows Server 2003. Please contact your system administrator.” Odd, especially considering that I was installing as the Domain Administrator, and that user should have more than enough permissions. A little bit of digging led me to MSKB 888791 which shows the permissions that are required in Group Policy to install the update. Check that your applicable GPO has the following permissions for your user:
Once I found the missing permission (in this case, an Exchange 2003 installation had removed the “Manage auditing and security log” permission) and added it back in, I ran the command “gpupdate /force”, logged off and back on again on the offending server and retried the installation. The error disappears and the installation is a success!