These Windows servers have usually problems with correct permissions for correct users - you need to give write permissions to I_USER (or IIS_USER - all those people who use moodledata through internet) on moodledata folders and subfolders like D:\moodledata/filter/tex/ - and executable files need executable permissions.
It is also possible that what ever permissions you give to your files Windows can permit running executable files on folders that are placed to system folders like c:\program files - I have seen this happen in Windows Vista and Windows 7 so it's probably true also in Windows Server 2003. If you install MikTex or TexLive for example to C:\Miktex (Texlive) or D:\Miktex (Texlive) and the same way GhostScript and Imagemagick such problems should not exist.
Sometimes you may need to delete old (Miktex) install folders from system (environment) variable PATH or add the correct folder to PATH if install script has not done it for MikTex and Windows does not find the files from correct folder. At least TexLive installer scripts should make this kind of things automatically - it just takes quite a long time to install those full distributions.
Finally settings of php may prevent running of executable files - in php.ini disable_functions should usually be empty and other security measures (in programs and scripts themselves) should control running "non secure" commands like exec() or system() freely.