First of all, it is unwise to use a trivial password for the ArcSDE administrator
account. You should always use a "strong" password (8-12 characters, mix
of upper and lower case, with numerals and special characters). The 'sde'
login password should be closely held, since anyone who knows it can corrupt
the entire instance (accidentally or otherwise). The fact that SQL-Server now
enforces password strength just reinforces the need for good database security
practice.
Manual service creation can be a challenge. As in the thread you referenced,
including the output of 'sdeservice -o list' (as text) is critical for us to identify
possible problems.
- V