I set up a new SDE database with ArcGIS 10 and everything appeared to go correctly. The service is running and I'm able to view the database in SQL Server.
However, when I try to access the spatial database connection in ArcCatalog 10, I get the following error:
Failed to connection to the specified server. This release of the GeoDatabase is either invalid or out of date. DBMS table not found [Microsoft SQL Server Native Client 10.0: Invalid object name 'sde_mymap.dbo.GDB_Release'.] [sde_mymap.dbo.GDB_Release]
Both ArcSDE and ArcCatalog are version 10.
I checked the sde_setup.log file and I can find no record of that table being created, or any other errors.