Windows 2003 requires a specific computer type in order to install properly on a fully-virtualized guest. This needs to be specified at the beginning of the installation process.

As soon as virt-viewer launches and boots the installer, press F5. If you do not press F5 at the right time you will need to restart the installation. Pressing F5 allows you to select a different HAL or Computer Type.

Choose Standard PC as the Computer Type. Then, press Enter to continue with the installation process.