Although I would receive this message occasionally, I started to receive this error more frequently after I installed Win2K Service Pack 4 and other updates. I finally solved the problem by changing the modem Data Connection Preferences to a Port speed of 19200. “Control Panel -> Phone and Modem Options -> Modems tab -> Properties -> Advanced tab -> Change Default Preferences -> change the Port speed to 19200”.
This event occurs when a modem is not fully compatible with Small Business Server 2000. From a newsgroup post:
"It appears that modems which are classed as Group 3, Class 1 will not work in SBS, even though they work in the W2K environment with other fax software such as Win Fax Pro, etc. I switched to a MultiTech MT5600ZDXV, and it has worked without a hitch ever since. This modem is supports both class 1 and class 2 protocols, so you have backward support and SBS Shared Fax Services works wonderfully."
This error also happens when the calling party hangs up during the initialization phase of the fax transmission.