I've got exactly the same problem and I just can't find out what the issue is. If I try and create a database via Management Studio I get the above error. If I use TSQL it creates without any problems. Also if I connect to another SQL Server machine I can happily use Management Studio! So it seems it's having trouble communicating to the local server!!? I played around with every DCOM setting I can see, the firewalls been up and down and that doesn't seem to help. I'm totally stumped. HELP!