Control Panel Version : 7C Build No. : 7.00.0020  
I setup SQL Server Instance in the server manager, ran the test and got "Database connected successfully."

I try to create a database and getting the following error:
Date-Time : 12/10/10  05-49-22. GMT
HC Error Number : 73100010
OS Error Number : 997
OS Error Descripting : SetParent failed for Database 'hidden_org_ff'.
 
Any ideas?
Thanks for your help!

Have you checked if all HC related services are running properly and SQL Client utilities are installed on your server? You can get list of these utilities from HC Team as I also faced similar issue few time back and was able to fix the issue after installing the required client utilities and then restarting HC Remoting services on the server.

Thanks for your reply
Yes all HC services are running
I'm not possitive SQL Client utilities is running.
I installed SQL Server 08 express from these directions: symantec. /connect/articles/install-and-configure-sql-server-2008-express (just put com after the .) forum wouldn't just let me put the link in

SQL services running are:
SQL Server VSS Writer
SQL Server Brower
SQL Server (MSSQLSERVER)

SQL service disabled are:
SQL Server Agent

SQL service set to maual are:
SQLAgent$HC

If I am not wrong HC7 don't support SQL server 2008 for user db creation. 
Check this page http://hostingcontroller.com/english/products/Hc8/Whats-new-HC8-hosting-panel-comparison.html

Yes HC7 is not supported with SQL 2008...

Thanks for your replys
I feel stupid for not checking that 1st

I now have installed MSSQL 05
As before getting a good dtabase connection
When trying to create a database getting the following error:
 
73100010 : Unable to create database.
Date-Time : 15/10/10  06-20-18. GMT
HC Error Number : 73100010
OS Error Number : 997
OS Error Descripting : Create failed for Database 'hidden_org_ff'.
 
I tried dirrections at:
A & B were already installed and newer version
C was not installed but is now
 
Still unable to create databases (even rebooted server)
 
SQL log file shows:
2010-10-15 06:20:18.05 spid51      CREATE FILE encountered operating system error 5(Access is denied.) while attempting to open or create the physical file 'c:\program files\microsoft sql server\mssql.1\mssql\Binn\hidden_org_ff.mdf'.
 
Thanks for any help you can provide!

Ok I found my issue I had it under the /Binn instead of /data

It's working now
Thanks for your help!

Set parent failed for database could occur also if you have not specified port 1433 in SQL Configuration Manager for SQL Server instance configured in Hosting Controller.