I'm trying to send a Package from a ConfigMgr SP1 BITS-enabled DP running on Windows 2008 to SMS 2003 Clients but it fails. If I look in the DataTransferService.log I see the following:

Error sending DAV request. HTTP code 401, status 'Unauthorized'
DataTransferService
GetDirectoryList_HTTP('URL') failed with code 0x80070005.
DataTransferService Error getting network access account credentials. Code 0x80040215
DataTransferService

Contributed By: Cliff Hobbs [MVP ConfigMgr]
This is a known problem as documented in Microsoft KB article 945635 "Systems Management Server 2003 clients cannot download a software package from a BITS-enabled Configuration Manager 2007 Service Pack 1 distribution point on a Windows Server 2008-based computer".