I had a bit of trouble upgrading to sp3 of the MSDE and found this helpful.
3.7.4 Upgrading Existing Instances of MSDE 2000 To SP3a
The following information applies only to Desktop Engine (MSDE 2000).
The examples in this section will upgrade an existing instance of MSDE 2000 to SP3a, and also disable the network connectivity for that instance of MSDE 2000. If the instance must accept connections from applications running on other computers, do not specify the DISABLENETWORKPROTOCOLS parameter.
The examples in this section assume that the sa login has a strong password. For more information about the sa login password, see section 3.7.2 Security Considerations for MSDE 2000 SP3a.
To upgrade SQL Server 2000 Desktop Engine
Open a command prompt window.
>From the command prompt, use the cd command to navigate to the folder containing the MSDE 2000 SP3a setup utility:
where c:\MSDESP3aFolder is either the path to the folder into which you extracted the MSDE 2000 SP3a files, or the Desktop Engine SP3a folder on the SQL Server 2000 SP3a CD.
Execute one of the following commands:
For a default instance using Windows Authentication Mode, execute:
setup /upgradesp sqlrun DISABLENETWORKPROTOCOLS=1
For a named instance using Windows Authentication Mode, execute:
setup /upgradesp sqlrun INSTANCENAME=InstanceName DISABLENETWORKPROTOCOLS=1
For a default instance using Mixed Mode (where AnAdminLogin is a member of the sysadmin fixed server role), execute:
setup /upgradesp sqlrun SECURITYMODE=SQL UPGRADEUSER=AnAdminLogin UPGRADEPWD=AdminPassword DISABLENETWORKPROTOCOLS=1
For a named instance using Mixed Mode (where AnAdminLogin is a member of the sysadmin fixed server role), execute:
setup /upgradesp sqlrun INSTANCENAME= InstanceName SECURITYMODE=SQL UPGRADEUSER=AnAdminLogin UPGRADEPWD=AdminPassword DISABLENETWORKPROTOCOLS=1