AD FS auditing subsystem could not register itself with the system

Trying to configure ADFS and SSO as per this article on a 2008 R2 server (domain controller) with WSS 3.0:

http://technet.microsoft.com/en-us/library/cc287811(office.12).aspx

I am getting this error when I access SharePoint:

http://technet.microsoft.com/en-us/library/cc734891(v=ws.10).aspx

In local security policy, the items show locks and the button to add users for Generate Security Audits is disabled.

I am using a domain account with admin privileges to run the related services and app pool.