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Joomla running on windows XP to 2003 Server R2 and with SEO functioning.
First job is to install ISAPI rewriter of your choice 
http://www.isapirewrite.com/ or http://cheeso.members.winisp.net/IIRF.aspx

ISAPI REWrite has a lite version (limited) and IIRF (IonicIsapiRewriter) is freeware always updated and the source is FREE!!! (perfered)

Both are configured via file IsapiRewrite4.ini (you dont need to worry about .htaccess.txt ignore it)

The following entries for ISAPI REWRITE.
---------------------------------------------------------
RewriteLog  D:\temp\iirfLog.out
RewriteLogLevel 3

IterationLimit 10

# Joomla/Mambo rewrite rules
RewriteRule  ^/$                      /index.php
RewriteRule ^/content/blogsection/([^/]+)/([^/]+)/ /index.php?option=com_content&task=blogsection&id=$1&Itemid=$2
RewriteRule ^/content/blogcategory/([^/]+)/([^/]+)/ /index.php?option=com_content&task=blogcategory&id=$1&Itemid=$2
RewriteRule ^/content/section/([^/]+)/([^/]+)/ /index.php?option=com_content&task=section&id=$1&Itemid=$2
RewriteRule ^/component/option,([^/]+)/([^/]+),([^/]+)/([^/]+),([^/]+)/([^/]+),([^/]+) /index.php?option=$1&$2=$3&$4=$5&$6=$7
RewriteRule ^/component/option,([^/]+)/([^/]+),([^/]+)/([^/]+),([^/]+) /index.php?option=$1&$2=$3&$4=$5
RewriteRule ^/component/option,([^/]+)/([^/]+),([^/]+)/ /index.php?option=$1&$2=$3
RewriteRule ^/content/category/([^/]+)/([^/]+)/([^/]+)/ /index.php?option=com_content&task=category§ionid=$1=&id=$2&Itemid=$3
RewriteRule ^/content/view/([^/]+)/([^/]+)/([^/]+)/([^/]+)/ /index.php?option=com_content&task=view&id=$1&Itemid=$2&limit=$3&limitstart=$4
RewriteRule ^/content/view/([^/]+)/([^/]+)/ /index.php?option=com_content&task=view&id=$1&Itemid=$2


The following is for IonicIsapiRewriter
-----------------------------------------------------
IterationLimit 10
MaxMatchCount 10

Tested and working with ARTIO JoomSEF

RewriteCond %{HTTP_URL}             (/|\.htm|\.php|\.html|/[^.]*)$   
RewriteCond %{REQUEST_FILENAME}     !-f
RewriteCond %{REQUEST_FILENAME}     !-d
RewriteRule (.*)                /index.php                      [U,L]RewriteCond %{HTTP_URL}             (/|\.htm|\.php|\.html|/[^.]*)$   
RewriteCond %{REQUEST_FILENAME}     !-f
RewriteCond %{REQUEST_FILENAME}     !-d
RewriteRule (.*)                /index.php                      [U,L]


Tested and working with default Joomla SEO
RewriteRule ^/$                      /index.php
RewriteRule ^/content/([^/]+)/([^/]+)/([^/]+)/([^/]+)/([^/]+)/ /index.php?option=com_content&task=$1&id=$2&Itemid=$3&limit=$4&limitstart=$5
RewriteRule ^/content/([^/]+)/([^/]+)/([^/]+)/ /index.php?option=com_content&task=$1&id=$2&Itemid=$3
RewriteRule ^/component/option,([^/]+)/([^/]+),([^/]+)/([^/]+),([^/]+)/([^/]+),([^/]+) /index.php?option=$1&$2=$3&$4=$5&$6=$7
RewriteRule ^/component/option,([^/]+)/([^/]+),([^/]+)/ /index.php?option=$1&$2=$3

Other Third party SEO should work once to follow there rewrite conditions/rules.
I run IonicIsapiRewriter-1.2.12b the betas are rock solid and I use it on my porduction servers with no issues.
Please follow vendors installation instructions to get the ISAPI filter working on your IIS server.