Can I delete Pagefile.sys with causeing issues?

A pagefile is required to carry to simulate memory when insufficient physical ram exists.
You can move this file to a different partition.   Have you moved Exchange and other items to another partition via this http://technet.microsoft.com/en-us/library/cc708031(WS.10).aspx

If you're running low on C: space, what is taking up all that space?

Please see http://www.lwcomputing.com/tips/static/bootdrivesize.asp for a list of over 20 things that may be done to recover disk space.

No, you are unable to delete the pagefile.sys unless you have enough physical memory to replace it.

What you can do instead is reduce the size.

From the server, right-click on "My Computer" and select properties. Select the "Advanced" tab and click on the Settings button in the Performance section. Go to its Advanced tab and click the Change button. Select the Custom Size option and set the initial size to approx 1023 and the max size to 2048. click OK on each opened window. It will need to reboot the system to apply these changes.

No I havent moved the exchange to a different partition... because its on its own partition and thats not even half full. Is this file connected to exchange?

Pagefile affects the performance of everything on the server.   if you already have Exchange on another partition, no need to move it, but there are many other things that can be moved.
How big is the partition on C:

The file isnt connected to Exchange but the windows OS itself.
You can move the pagefile to the partition with Exchange and it wont have too much effect on the performance.

I have attached a screen shot of the drives and free space.
server2.doc

By the way, your pagefile may be TOO SMALL.  Pagefiles should be 1.5X RAM.  If that's 1.5x RAM than you barely have 1 GB of RAM in an SBS 2003 server - by today's standards FAR TOO LITTLE physical memory.  If you have upgraded the RAM, then you should have INCREASED the size of the page file (and moved it off the C: drive).  But as I said, there are potentially 20 things you can do to free up space - see my link - and correct the pagefile settings.

I'm agreeing with leew...don't mess with the pagefile, move other stuff using either the link I sent or check his link.

Do you have WSUS running on your server?

You have a 30 GB C: drive? THAT'S HUGE - TOO BIG in my opinion... You need to read my link and figure out what's taking up the space.  There's no good reason to be using 28 GB of space on the C: drive of an SBS server.

see attached.
server3.doc

OUCH... and you've compressed the C: drive?  Not good...

it shows uncompressed now

We do have a sql database running on c...its 836, 196 KB, could this be my problem?

Why are you NOT analyzing your disk space?  My link references DIRUSE.  Have you used it yet?  You can get a mostly accurate listing from the other tools I mention but prefer not to use such as TreeSize (and a more recent app I've experimented with, WinDirStat).  Have you read through the link yet?  If you want to solve your issue, read our comments and recommendations.