Jim,
Just to confirm, is this Server 2003 R2 Enterprise SP2? It has to be at SP2 to be compatible. If it is not we may need to slipstream the SP in.
What I would like to try also is using the Build and Update Utility to install the OS. Download this ISO and burn to disk, you will boot to it before the OS media.
BUU - www.dell.com/.../poweredge-t310
Let me know how it goes.