I got a strange error while installing MOSS 2007 yesterday at a client. I've installed MOSS a hundred times, so I knew everything was ok. The error I was getting was "
11/26/2007 16:20:47 7 ERR Failed to create the configuration database. An exception of type System.Security.AccessControl.PrivilegeNotHeldException was thrown. Additional exception information: The process does not possess the 'SeSecurityPrivilege' privilege which is required for this operation."
This post I read pointed out that the user running the install needs to have the “manage auditing and security log” privilege. You can see below that even though I was a local admin, I didn't have that privilege. The permission was changed, I logged out and back in, and the install worked fine.