Just an update on this issue for anyone else that may be having the same issue.

After spending several hours on the phone with MS support, it appears that Microsoft broke the ability to use a 2005 distributor and a 2000 publisher in SQL Server 2005 Service Pack 2. This issue, according to them, has no workaround and is not expected to be fixed until Service Pack 3.:angry:

FANTASTIC!!!

I'll update this again if they ever fix it.