Originally Posted by tkrussell
The only way two wire outlets with only two wires at each outlet and no equipment ground can be changed with three wire outlets is to have the three wire outlets first protected with a GFI device.
If the first two wire outlet in a circuit can be changed with a GFI outlet, and then the remaining circuit can be protected with the load side of the GFI, the downstream outlets can be three wire outlets, and the labels that come with the GFI "No Equipment Ground" be placed on each three wire outlet that the GFI protects.
If it is not possible to use a GFI receptacle to protect downstream outlets, then the entire circuit can be protected using a GFI circuit breaker, again labelling each three wire outlet with "No Equipment Ground".
This method is allowed by code to offer ground fault protection only. A short circuit can still occur in an appliance, and without the safety of the equipment ground, the metal frame can still be energized and not trip a breaker, but the GFI protection will protect a person from injury.
Of course, the best method is to run new wiring with an equipment ground, but for those cases it is impractical, at least there is GFI protection.
If you chose not to do any GFI protection, then no three wire outlets are allowd, and only two wire replacement outlets can be installed.