try the following taken from (
http://support.microsoft.com/kb/889646)
To resolve this issue, you must add an account to the Database Creators role and to the Security Administrators role in SQL Server. You add the account that the application pool is running as. To do this:
Add the account that the application pool is running as to the Security Administrators role and to the Database Creators role in SQL Server. To do this:
Start SQL Server Enterprise Manager.
Expand Microsoft SQL Servers, expand the server group, expand the appropriate server, and then expand Security.
Right-click Logins, and then click New Login.
Type the account name in the Name box. Use the following format for the account name:
DomainName\AccountName
Note If SQL Server is installed on a separate computer and you want to run the application pool as the Network Service account, the computer that is running Windows SharePoint Services must have permissions to access the remote computer that is running SQL Server. On the remote computer that is running SQL Server, add the DomainName\ServerName$ account to the Database Creators role and to the Security Administrators role.
Click the Server Roles tab.
In the Server Role list, click to select the Security Administrators check box, and then click to select the Database Creators check box. Click OK.
Quit SQL Server Enterprise Manager.
On the Configure Administrative Virtual Server page of SharePoint Central Administration, create a new application pool, specify the account as the application pool account, and then click OK. The Application Pool Changed page is displayed.
Restart Microsoft Internet Information Services (IIS). To do this, click Start, click Run, type iisreset in the Open box, and then click OK.
On the Application Pool Changed page, click OK. On the Set Configuration Database Server page of SharePoint Central Administration, specify the configuration database settings.
