Because of the nature of the Windows Service pack (SP) releases, all the windows updates are consumed by SP upgrade. So once you upgrade to a new SP all the updates that were installed earlier cannot be uninstalled.  Since Windows PowerShell is released as an update to Windows, upgrading to W2k3 SP2 will remove the powershell uninstaller and you cannot uninstall PowerShell directly.

Windows update technology do not support out of order uninstalls ie.,

     1. Install Update A + Install Update B + Install Update C. 

     2. To uninstall Update A, the supported way to uninstall A is -> Uninstall C + Uninstall B then Uninstall A.

Since W2K3 SP2 is an update to W2K3 SP1, if you install Powershell on W2K3 SP1 and upgrade to W2K3 SP2, to uninstall PowerShell you first have to uninstall W2K3 SP2.

I just want to let you all know of this Windows Update behaviour.

Krishna Vutukuri[MSFT] 

Windows PowerShell Development

This posting is provided “AS IS” and confers no rights or warranties.

Update:  PowerShell uninstaller is present on disk after upgrading to W2K3-SP2 at %windir%\$ntuninstallkb926139$\spuninstall\spuninstall.exe. Windows update technology do not support out of order uninstalls, see “Removing Windows software updates in the wrong order may cause the operating system to stop functioning” (http://support.microsoft.com/kb/823836/en-us).