Our Windows 2003 server must have a different w32time version, as it does not answer to ntpq queries and thus is still only talking SNTP.
I don't think you have a different version. It may be only a matter of configuration. Maybe it doesn't answer to ntpq queries because the ntp server parameter isn't set.
Setting the root dispersion is of course the best way to bypass the problem.
JFI: Where are you able to set this value?
All the configuration of the Windows time server is done in the Windows Registry, here:
HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Services\W32Time
For example to set the dispersion it is the DWORD
HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Services\W32Time\Config\LocalClockDispersion
Florent