There is a known problem with pre sp2 of SqlXml WR3 when running with IIS 6.0 (Windows Server 2003).  Basically, SqlXml virtual directories do not work properly when using the “Configure IIS Support” tool to set up SqlXml virtual directories on a box running IIS 6.0.  Here are the steps for configuring it properly:

 

 

1.     Open up the IIS Manager MMC, add a new Web Service Extensions named SQLXML, pointing to [C:\Program Files\Common Files\System\Ole DB\sqlis3.dll]  (ignore the brackets)

2.     Start the "Configure IIS Support" mmc snap-in that is in the SQLXML 3.0 program group.

3.     Add a Virtual Directory, configuring it appropriately. Save everything and then close out.

4.    Go back to the IIS Manager, locate and select the newly added VDIR (you may have to refresh), right-mouse select Properties, press the configuration button, and select the sqlis3.dll mapping in the "Wildcard application maps" list. Press the Edit button.

5.    Wrap the complete path in the 'Executable' control in double-quotes.

6.    Uncheck the "Verify that file exists" option.

7.    Press Ok and close all modal dialogs.

 

Note, this is fixed in SqlXml Wr3 sp2 for new virtual directories, that is the manual configuration is not required.   However, if you upgrade to SqlXml Wr3 sp2 you will need to fix existing virtual directories manually.