Before installing InventoryControl v7 on Windows Server 2003 running full SQL 2000 (and not upgrading SQL), first install Microsoft .NET 3.5.1 Framework, either from DISC:\PROG\DotNet\dotnetfx35sp1.exe, or download from http://www.microsoft.com/en-us/download/details.aspx?id=25150 then restart the server.
If this component is not installed, the database installation fails, saying "Fail to login into database on SERVER\INSTANCE."