I happen to have a Windows Server 2003 computer here so I decided to install Emacs 23.3 and see if I could figure out a way to avoid the "c:/.emacs.d/server' is unsafe" error. Fortunately, I was able to do so without having to change server.el.
First, when I installed Emacs, I did not change any environment variables. I also to not have a site-start.el or a .emacs file on this system. I simply extracted the emacs-23.3-bin-i386.zip file to c:\ (which created the directory C:\emacs-23.3) and then ran emacs.exe from the command line. Using this setup Emacs used "C:\Documents and Settings\Administrator\Application Data" as my home directory and created the .emacs.d directory at "C:\Documents and Settings\Administrator\Application Data\.emacs.d." I have been following this thread and I have seen mention of the .emacs.d directory being created at "c:\.emacs.d" and at "c:/program files/emacs-23.2/.emacs.d" and I have no idea why that is happening unless you are attempting to set the HOME environment variable to either "c:\" or ""c:/program files/emacs-23.2" for some reason. If you are, there is absolutely no reason to do this. If you do not set the HOME environment variable, Emacs should use the path "C:\Documents and Settings\{UserName}\Application Data" on Windows 2000, Windows XP, and Windows Server 2003 and the path "C:\Users\{UserName}\AppData\Roaming" on Windows Vista, Windows 7, and Windows Server 2008 automatically.
After I started Emacs, I ran the server-start command. I got the server is unsafe message just like you did. I resolved the error by navigating to "C:\Documents and Settings\Administrator\Application Data\.emacs.d" in Windows Explorer, selecting the server folder and pressing Alt + Enter. This brings up the "server Properties" dialog box. On the Security page of this dialog box I pressed the Advanced button. This brings up the "Advanced Security Settings for server" dialog box. The owner page displays information on who currently owns the folder in the "Current owner of this item" edit window. The owner was listed as "Administrators" (note the s at the end). I selected "Administrator" (no s at the end) in the "Change owner to" list and pressed the Apply button. I then restarted Emacs, ran the server-start command and did not get any errors!