I'm creating policies and I'm confused about this setting. How does ePO know if a box is a server or a workstation? Also, I have a few Windows Server 2003 workstations. Which option should I pick for those? Using ePO 4.6.1 if it matters.
It specifically pulls operating system information to make the determination.
>>, I have a few Windows Server 2003 workstations
I don't really understand that statement. The operating system is clearly a server OS. The underlying hardware is irrelevant to the assignment of the tags.
I believe ePO will identify this through registry values and OS installed on those machines.
You can review the properties for servers and workstations to see if they're correctly identified.
If by some chance you have a physical workstation (a hardware that is intenteded to be used as a workstation) with Server OS installed, ePO problably will identify this as a server.
Then, you can configure policies for server and workstations, note that you don't have to create a policy for each one. The same policy can configure specific settings for servers and workstations.