SQL Server 2005 and SQL Agent

I upgraded an MSDE 2000 default instance to SQL Server 2005 Workgroup
Edition. SQL Agent Service is configured to logon as local system. Two of th
e
SQL Agent jobs that were functioning without error in MSDE 2000, now fail on
the jobsteps that use the Active Scripting subsystem with the following
error:
"Message
Error creating security descriptor for shared objects (reason: No mapping
between account names and security IDs was done).  The step failed."

If I join the server to a domain, these jobs run fine. If I change the SQL
Agent Service to run under the context of the local Administrator account,
these jobs run fine. Neither of these workarounds is acceptable as most of
our servers are not part of a domain, nor do we want to run SQL Agent Servic
e
under the local admin account.  Have others seen this behavior? I have
checked and rechecked the permissions in local security policy. The only one
that I found was missing that is "supposed" to be there was t he act as an
operating system permission for the sql server agent group.