SQL 2005 Upgrade to Sp2 gives Error when testing Authentication -Reporting Services fails to Authenticate on Windows Server 2008

Details:     1. Operating System is Windows Server 2008.

                2. SQL 2005 Is installed, not trying to install SQL 2005 Sp2.

                3. Specifically it is Reporting Services -Report Server

                4. Firewall is Disabled

                5. Btoh Network Configuration and Client Configuration Protocols have: TCP/IP and Named Pipes, Shared Memory enabled

Error in Hotfix.log

01/30/2009 12:21:31.883 Error, cannot determine sysadmin status for instance: MSSQLSERVER

01/30/2009 12:18:22.288   HResult 0x274D, Level 16, State 1

01/30/2009 12:18:22.304   TCP Provider: No connection could be made because the target machine actively refused it.

01/30/2009 12:18:22.319   Sqlcmd: Error: Microsoft SQL Native Client : An error has occurred while establishing a connection to the server. When connecting to SQL Server 2005, this failure may be caused by the fact that under the default settings SQL Server does not allow remote connections..

01/30/2009 12:18:22.319   Sqlcmd: Error: Microsoft SQL Native Client : Login timeout expired.

Anybody have any ideas on how to fix this?