You should be weary of ever changing any service account through any means other than SQL Configuration Manager, this includes the Windows services menu. SQL Configuration Manager does a lot more than change the service account for a windows service. When you make a change, the configuration manager actually adds the login to a local windows group(SQLServer2005MSSQLUser). This group has rights to make SQL run including binary/registry items, file_paths, etc.. You can directly add your user to this group but best practice suggests that you use the configuration manager.

I would try the configuration manager again. You could probably change the account back to the working domain account or local system and then change it to the new domain account. This should clear up the issues.