Hi Jeff,
To answer your question, NO the server does not need a reboot when adding
printers, etc. You might try stopping the Print Spooler service in Services
and restarting it and trying again.
If the issue persists, then trying adding a driver that ships with W2k such
as the "Generic Text Only" driver and try it as before. If this works then
you know the Print Subsystem is working ok. Then we need to know what
specific driver is having a problem installing. If the "Generic" driver fails
too then probably need to look at the Print Registry key to see if there is
anything that should be cleared out (deleted driver, 3rdparty, corrupt, or
unnecessary Port Monitor) that could be stopping the install process.
This key is where driver info for printers are installed:
HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Control\Print
See article below for more information regarding this key.
Warning: Before modifying anything in the above key be sure to Export it
first in order to create a backup so you can restore it if necessary.
Some related articles:
http://support.microsoft.com/default.aspx?scid=kb;en-us;330386
Registry Entries for Printing -
http://support.microsoft.com/default.aspx?scid=kb;en-us;102966
-Joe Tuck