Event ID 1000, 108, or 102 may be logged when computers try to install software by accessing a share on a Windows NT 4.0-based file server

When Group Policy is configured to assign a software installation package to client computers that are running Microsoft Windows Server 2003, Microsoft Windows XP Professional, or Microsoft Windows 2000, the administrator must specify a share path that hosts the software installation files. If the specified share is located on a Microsoft Windows NT 4.0 file server, the software installation policy may not be successfully applied, and the following errors may be logged on the client computers for which installation was assigned:

Source: UserEnv
Event ID 1000
The Group Policy client-side extension Application Management was passed flags (1) and returned a failure status code of (1612).

Source: Application Management
Event ID 108
Failed to apply changes to software installation settings. Software changes could not be applied. A previous log entry with details should exist. The error was The installation source for this product is not available. Verify that the source exists and that you can access it.

Source: Application Management
Event ID 102
The install of application "{Package Name}" from policy "{Policy Name}" failed. The error was The installation source for this product is not available. Verify that the source exists and that you can access it.

When programs are assigned to a computer, the computer tries to access the software installation share by using the credentials of the computer account. Computers that are running Windows Server 2003, Windows XP Professional, or Windows 2000 require Kerberos authentication. Windows NT 4.0 is not Kerberos-aware and can provide only NTLM authentication. Therefore, authentication is unsuccessful.

To resolve this issue, host software installation shares on Windows 2000-based or Windows Server 2003-based computers.

This behavior is by design.