This is SQL Server 7.0.
I changed the SQL Server service account and the SQL Server agent account from the local system account to a domain service account.
After changing the account, the user database uses the SP_OACreate, SP_OAdestroy extended stored procedures and this started reporting Access Denied (when the user stored procedure was even run by a system admin). I checked registry keys for the ActiveX object and it looks like my account has permission. I also added the domain service account as a local admin and still had the same issue.
Any ideas?