I had another difficult one today. When upgrading to 2008 SBS from 2003 you first have to make sure that SBS service pack 1 is installed. This is not the same as Windows 2003 SP 1 or 2. So after trying to install that it says that KB891193 has to be installed. So I download that and it gives me an error about not being able to find the specified path.
It turns out that if the clientapps folder either gets moved, or has its permissions changed then that update won't work and you can't move forward. So go into regedit and lookup the following key:
Check to see if that destination exists and you have full permissions to everything. Also you need tobe logged in as the administrator with full default rights. Since it's a domain controller you can't log in as the local administrator, but you still have to be in as the domain administrator.
Once that's run you can now run the SBS service pack 1. These files are both over 200 MBs so make sure you have time and bandwidth to download them from Microsoft.
After that you can continue with the migration.