The SQL Server services actually are configured to run under the Network Service account.

I think you are on to something as I am getting a login failure being logged in Event Log when I try to view the SQL ERRORLOG.

I will switch the SQL services to run under a domain account (which is a member of the local ADMINs group) and see if that resolves the issue.

As a side note, here are the exceprts from the Application event log.

[font="Courier New"]Login failed for user 'NT AUTHORITY\NETWORK SERVICE'. [CLIENT: ]

The description for Event ID 17052 from source MSSQLSERVER cannot be found. Either the component that raises this event is not installed on your local computer or the installation is corrupted. You can install or repair the component on the local computer.

If the event originated on another computer, the display information had to be saved with the event.

The following information was included with the event:

Severity: 16 Error:18456, OS: 18456 [Microsoft][SQL Native Client][SQL Server]Login failed for user 'NT AUTHORITY\NETWORK SERVICE'.

the message resource is present but the message is not found in the string/message table[/font]