I don't see SBS on http://www.intel.com/support/motherboards/server/s3420gp/sb/CS-030739.htm - just the basic OS. Can you try just 2008, no SBS?
If everything is working fine in Safe Mode, at least you know it's not bad hardware. Unfortunately, finding out which driver or service is causing the lockups takes a long time. What does your Event Viewer show?
What firmware versions do you have? Have you updated BIOS, BMC FRU/SDR? Find below a link to the latest firmwares
What drivers have you installed? The exact version?
What order you installed the drivers? For example... 1st Chipset 2nd Video 3th Audio (If any) 4th Network card...
Where did you get the drivers from? CD or Web site? Find below a link to the latest drivers for your motherboard.
Have you checked Event Viewer in Windows? Any Events that should be of concern?
If you believe that might be a hardware issue... which at this time I doubt as it works fine on Safe Mode... looks more like software issue. I would probably cross test with another operating system.
For example Windows Server 2008 Enterprise or Standard.
Im not sure abt the BIOS version, but the drivers are the lastest cause I got them from the site 2 days ago.. Last nite I reinstalled the machine from sratch, following the entire SBS Installation wizard to the end. I eventually made it to the desktop and configured my network settings, using only one NIC. NIC drivers were installed during the Wizard, as required by SBS. I installed IE8 and restarted. Came back and the server was frozen. Note that I had not installed the chipset nor the display driver at the time. I powered it down, unplugged it for a cpl of seconds and when I switched it back on, it worked fine again, even prompted me to install new hardware.
This I used to see it a lot with SBS 2003. Where it would just crash and the only way to solve the crash, short of reinstalling, was to switch off, unplug the power, wait a few and problem solved.. So now it seems Im goin thru the same thing.
Also, the Intel Preparation Disc for this board doesnt have SBS on its list of OS. Could that be the problem also?