I love notepad2 and it's compulsory to replace notepad in every computer I use. I found that Windows Server 2003 has this security feature to always recover notepad.exe everytime it gets updated.

To overcome that I found this blog post Replacing Notepad with Notepad2, which apparently for Windows 2000, but also works great on windows server 2003.

This is the summary:

1. Make a backup of the current registry, and remove the value from these keys:
   HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows\CurrentVersion\Setup\\Installation Sources
   HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows\CurrentVersion\Setup\\ServicePackSourcePath
   HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows\CurrentVersion\Setup\\SourcePath
2. I think you need to restart the computer for the registry setting to take effect. Not 100% sure
3. Copy notepad2 to C:\notepad as notepad.exe
4. Run this batch script Notepad Replacement for 2000
   This scriptcopies C:\notepad\notepad.exe to the folowwing location:
   1. C:\Windows\System32\notepad.exe
   2. C:\Windows\notepad.exe
   3. C:\Windows\system32\dllcache\notepad.exe
   4. C:\WINDOWS\ServicePackFiles\i386\notepad.exe
   5. C:\Windows\System32\dllcache\notepad.exe