Application Server W2K

We just purchased an additional Compaq server for our school district network and because of it’s speed and size, I wanted to install and run it as an application server but I’m having a hard time setting it up. The application “Office 97” doesn’t install right and now I’m receiving a message as the server loads into Windows saying “The Terminal Services Licensing service terminated with service-specific error 29. The device, \Device\Scsi\cpqarry21, is not ready for access yet.” Any help would be appreciated.