The _SMSTSORGNAME value does not work with ZTI and SMS 2003, only with SCCM 2007 or Lite Touch.
Background:
The problem happens because with ZTI and SMS 2003, Microsoft Deployment call the task sequencing engine TSMbootstrap directly from the DP. Since it is running from the DP the variables.dat file would also need to be on the DP to pick up the variables. Microsoft Deployment store the variables in the OSDENV.INI and synch up the variables after the task sequencer starts but by then it is too late to set the _SMSTSORGNAME variable.
Here is the workaround (gracely provided by Tim Mintner)
Create a variables.dat file in your package source and distribute that to your DP’s. The contents of that variables.dat file should be the following: