Bladeruner is right - even though the UO install program says it doesn't support win2k, it doesn't mean that it doesnt work. There are NO win2k specific patches for any version of ultima online, and in my humble opinion, there arent any needed either - both the 2d client and the 3d client run MUCH better under win2k than they did under windows 98/Me for me.
As for that error message - either the UO servers are being flaky, your ISP is having problems, OR you are using the wrong login information. I often get that error message if I accidently type in the wrong password when logging in. So it might be a good idea to go to www.uo.com and check your account details.