Error: SQL Server Setup could not connect to the database service for server configuration.
There is much more text to the actual error posted on subject line, it is:
TITLE: Microsoft SQL Server 2005 Setup
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SQL Server Setup could not connect to the database service for server configuration. The error was: [Microsoft][ODBC Driver Manager] Data source name not found and no default driver specified Refer to server error logs and setup logs for more information. For details on how to view setup logs, see "How to View Setup Log Files" in SQL Server Books Online.
This could be a problem during the installation of SQL Server on a server or even when attempting the new connections from the client machines.
Lately this issue has occurred when one of the Systems Management support personnel trying to reinstall the SQL Server services on a QA machine to get ready for new deployment testing. At first when it is reported I had no doubt to see whether any issues with SQL Native Client (SNAC) corruption or incompatible, so I took the inventory of the operating system and other client components on the server, all stays as per the standard configuration. By default if you get such an error best is to refer to SQL Server error log & windows event viewer system log for further information. So I have checked the same and found that it is the Sql Native client DLL, as I can see sqlncli.dll present in the \Windows\System32 directory there was no entry on the drivers tab of the Data Sources (ODBC) utility (control panel --> Adminsitrative Tools --> Data Sources).
It is the new problem that poses if your server has got applied any new hotfix or changes to the security policies with registry or service accounts then you must check whether such changes has been applied recently. So in my case it wasn't the case so the option is to uninstall the existing SNAC tools from Add/Remove programs and reinstall afresh, still problem relies upon due to the nature of existing files have not been removed. So the option is to unregister that DLL and delete the file, then reinstall the SNAC component seperately.
Further to add on to my investigation I found that this issue may occur when you have side-by-side installations of SQL Server 2005, SQL Server 2000, and SQL Server 7.0 and when you uninstall any one of the versions. This issue may also occur when you have side-by-side installations of SQL Server 2000 and SQL Server 2005 and when you installed SQL Server 2000 after you installed SQL Server 2005. This is because the registration for the SQL Server 2005 SQL-DMO COM library was deleted. To re-enable SQL Server Enterprise Manager and other programs that depend on SQL-DMO, register SQL-DMO. To do this, run the following command at a command prompt: regsvr32.exe sqldmo.dll.
If it is in the case of SQL Server 2008 do not attempt to uninstall in any unsupported way such as deleting registry keys, it is nothing but inviting trouble. Reinstall the Microsoft SQL Server Setup Support Files component (SqlSupport.msi) before you uninstall each component in the instance.