Leveraging Virtual Machines is a great way to develop against SharePoint. I was trying to update Visual Studio 2005 on a dev VM to SP1 and kept receiving "Error 1718. File FileName was rejected by digital signature policy." The cause of this error is actually related to a lack of Virtual Memory. However, I still received the error after increasing the virtual memory. The HotFix available in this http://support.microsoft.com/kb/925336 MS Support Article resolved the issue.