I am getting the error below when I try to deploy a sharepoint workflow integrated workflow from Visual Studio. Does anyone know how to fix it?

My setup is a single virtual server with MOSS and K2 SP1 installed on it. The service user for K2 is a local admin as is the Sharepoint service user, and the K2 service user is site collection administrator. My account (that I am logged in as when I try to deploy) is also a local admin on the machine, and site collection admin. Kerberos is not being used. 

The project builds without error.

I have tried creating a new (very simple) process, and it gives the same error.

I am able to deploy a process that has a Sharepoint Event Process rather than the Sharepoint workflow integration

It would be great if someone could help me out with this, as I am supposed to be demonstrating next Wednesday.....


Error Below:

Error 2 Task Error: System.Exception: Error occurred adding the feature to the farm. ---> System.Web.Services.Protocols.SoapException: Server was unable to process request. ---> Access denied.
   at System.Web.Services.Protocols.SoapHttpClientProtocol.ReadResponse(SoapClientMessage message, WebResponse response, Stream responseStream, Boolean asyncCall)
   at System.Web.Services.Protocols.SoapHttpClientProtocol.Invoke(String methodName, Objectm] parameters)
   at SourceCode.SharePoint.WebServices.K2SPFeatures.AddWorkflowFeature(String featureTitle, String description, Boolean isDefaultForms, K2SPStartForms startForms, K2SPTaskFormK] taskForms, K2SPModificationFormf] modForms)
   at SourceCode.Workflow.SharePoint.Common.Features.AddWorkflowFeature(String featureTitle, Boolean isDefaultForms, String FeatureDescription, K2SPStartForms startForms, List`1 taskForms, List`1 modForms, CredentialCache credCache)
   at SourceCode.DeploymentTasks.SharePoint.WorkflowIntegration.ConfigureEvent.AddFeature(IntegrationObject integration)
   at SourceCode.DeploymentTasks.SharePoint.WorkflowIntegration.WorkflowIntegrationService.Execute(IntegrationObject integration, Boolean testMode, Boolean createDependancies)
   --- End of inner exception stack trace ---
   at SourceCode.DeploymentTasks.SharePoint.WorkflowIntegration.WorkflowIntegrationService.Execute(IntegrationObject integration, Boolean testMode, Boolean createDependancies)
   at SourceCode.DeploymentTasks.SharePoint.WorkflowIntegration.WorkflowIntegrationTask.Execute()
 C:Documents and SettingsadminMy DocumentsVisual Studio 2005ProjectsSDIProdSignOffSPWFSDIProdSignOffSPWFobjDebugDeploymentSDIProdSignOffSPWF.msbuild 74 6 SDIProdSignOffSPWF