When you’re trying to configure the database server and database name in the "Manage Server Settings for Single Sign-On" page you get a:
"Failed to connect to the database server. Verify connectivity and rights for the configuration account and try again."
despite you know that the ssosrv service runs under the security context of a "mighty user" with full rights on the database server.
From the posting on the Internet it seems that the SP1 for W2K3 has something to do with it, however there’s a fix: find the ImagePath registry entry at the following location:
Remove the quotation strings from around the the ImagePath value, bounce the Single Sign-On service and try to apply the configurations of the "Manage Server Settings for Single Sign-On" page again.