I recently stumbled upon this very interesting blog from Chris Gideon - definitely check out these postings:
- NTLM authentication with SharePoint - hardcore posting about how SharePoint addresses the authentication process
- NTLM authentication with SharePoint - implications of multiple domains in 2 different scenarios with NTLM authentication and SharePoint
- #50070: Unable to connect to the database -
More info about how to troubleshoot this dreaded error. Hint : in the majority of cases this is not a WSS problem.
- Focus on WSSv3/MOSS upgrade ... keeping Kerberos in mind