I'm about out of ideas, maybe Data Center 2008 has more restrictive configuration by default than other flavors of Win 2008
sorry you are having this trouble but I've done about all I can to try to help you.
you never did answer why not .NET 4 and why Sqlite but those are tangential questions, but you also never answered about whether the machine is a domain member and that was relevant to the problem.
Best,
Joe