I thought I would share our solution, having not gotten Joomla running on windows 2003 Server R2 and with SEO functioning.
First job is to install ISAPI REWRITE
http://www.isapirewrite.com/Then you need to configure the filer IsapiRewrite4.ini for joomla SEO
the following entries got our site working
RewriteLog D:\temp\iirfLog.out
RewriteLogLevel 3
IterationLimit 10
# Joomla/Mambo rewrite rules
RewriteRule ^/$ /index.php
RewriteRule ^/content/blogsection/([^/]+)/([^/]+)/ /index.php?option=com_content&task=blogsection&id=$1&Itemid=$2
RewriteRule ^/content/blogcategory/([^/]+)/([^/]+)/ /index.php?option=com_content&task=blogcategory&id=$1&Itemid=$2
RewriteRule ^/content/section/([^/]+)/([^/]+)/ /index.php?option=com_content&task=section&id=$1&Itemid=$2
RewriteRule ^/component/option,([^/]+)/([^/]+),([^/]+)/([^/]+),([^/]+)/([^/]+),([^/]+) /index.php?option=$1&$2=$3&$4=$5&$6=$7
RewriteRule ^/component/option,([^/]+)/([^/]+),([^/]+)/([^/]+),([^/]+) /index.php?option=$1&$2=$3&$4=$5
RewriteRule ^/component/option,([^/]+)/([^/]+),([^/]+)/ /index.php?option=$1&$2=$3
RewriteRule ^/content/category/([^/]+)/([^/]+)/([^/]+)/ /index.php?option=com_content&task=category§ionid=$1=&id=$2&Itemid=$3
RewriteRule ^/content/view/([^/]+)/([^/]+)/([^/]+)/([^/]+)/ /index.php?option=com_content&task=view&id=$1&Itemid=$2&limit=$3&limitstart=$4
RewriteRule ^/content/view/([^/]+)/([^/]+)/ /index.php?option=com_content&task=view&id=$1&Itemid=$2
hope this helps others.