Ken,

Thanks for the reply.  I did log in as a member of local administrator group - this server is isolated and not on any domains. But I install the SP from...

One thing to add: the 'builtin/administrator' login should have a role of 'system administrator'

Does the 'builtin/administrator' login exist in the SQL server?  If not, put it back and try again.  I run into the same issue and after I put the 'builtin/administrator' account...