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Command createssp failed for SSP..Unable to connect to database

I received this error while creating the SSP for a MOSS 2007 SP1 farm:

Command createssp failed for SSP 'SharedServices2' Microsoft.SharePoint.SPException: Unable to connect to database. Check database connection information and make sure the database server is running. ---> System.Runtime.InteropServices.COMException (0x81020024): Unable to connect to database. Check database connection information and make sure the database server is running

I tried both from GUI of Central Admin and also createssp command of stsadm, both failed with the same error. I checked the ULS logs and found the above error. In event viewer I could see the event id 6141:

Event Type: Error

Event Source: Windows SharePoint Services 3

Event Category: Topology

Event ID: 6141

Description:
The site /ssp/admin could not be created. The following exception occured: Unable to connect to database. Check database connection information and make sure the database server is running.

No matter what I tried SSP was not provisioning. After hours of researching on the Internet I found that restarting search service and reconfiguring SSP might solve this problem. I thought of starting from the scratch. The following steps solved this problem and SSP was provisioned successfully:

1. Delete the SSP web application
2. Stop the search query & index services
3. Start the search query & index services
4. Restart IIS in Application server (I was trying to create SSP from my App server)
5. Recreate the SSP web application on a different port
6. Recreate the SSP from Central Admin - Create or configure this farm's shared services

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