A declarative workflow does not start automatically after you install Windows SharePoint Services 3.0 Service Pack 1

If you are using the WSS 3.0 SP 1 there is a known issue of a declarative workflow not starting automatically under following conditions

1. The Windows SharePoint Services Web application runs under a user’s domain account.
2. The user logs in by using this domain account.
3. The site displays the user name as System Account.

Refer the Microsoft Support Article for more info and resolution

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