Trying to run SQL Server 2000 using a account that is not local administrator is very difficult. There is lots of functionality that does not work. My understanding is that it is best practice to use a local administrator account to run SQL Server 2000.

With SQL Server 2005 and above, there is no requirement to use an account with local administrator rights. Best practice for SQL Server 2005 is definitely do not use local administrator rights. Although there is one function within SQL Agent that requires local administrator rights if you use it (auto restart of SQL and SQL Agent), this can be achieved without using local administrator rights and far more flexibly by configuring the service restart options in the Windows service control applet.

If your security people are paranoid about not letting SQL Server run using local administrator authority, use this as a lever to move to SQL Server 2005 or 2008.

If your organisation wants to control SQL Server 2005 account rights using Group Policy Objects (GPOs), which is definitely Windows best practice, the SQL Server FineBuild Reference document has a section you can cut out that gives all the GPO details you need.