Symptoms:

When you are trying to update or install a driver via CompMgmt.msc and click “Update driver”, nothing happens. Also, you get an errors in System log:

Event Type: Warning
Event Source: PlugPlayManager
Event Category: None
Event ID: 264
Date: 24.02.2008
Time: 23:49:06
User: N/A
Computer: PCNAME
Description:
Client side device installation was not performed because the file "C:WINDOWSsystem32newdev.dll" was not found.

For more information, see Help and Support Center at http://go.microsoft.com/fwlink/events.asp.

Solution:

Just extract NEWDEV.DL_ from distributive of Windows Server 2003 to %SYSTEMROOT%System32newdev.dll.