Ed, I do believe you are on to something, but I experienced the same problem with adding "Domain Admins" to the server with the SysAdmin role, the next day. I mean that my original band-aid stopped working the next day. The new band-aid I put on it, until I can fully investigate and understand the problem/resolution, was to create a new local group on Win2008 called "SQLAdmins", add the "Domain Admins" to it then add that local group to the SQL Server with SysAdmin role.

I am hoping I will get the copy of the server soon so I can mess with it a bit and try different thing to fully understand what's happening.

Some of my other research on the Internet has suggested it's UAC (user access control) causing the problem, and this would be closely related to what you describe.

Thanks,

Chris