Hi PPL,
It's been a while since I last installed AX 2009, I'm getting:

I'm just installing ONLY one component DataBase (custom installation)
SQL Box is Win Server 2012, SQL Server 2008 R2
AX Box is Win Server 2008 R2 Std
I've already applied "KB957312 -Fix for Reporting Extensions on Sql Server 2008" to the installation media. Both boxes have all OpSys patches applied.
Since it's a customer environment I have no access to domain admin credentials :( I suspect a permissions issue.
Knd Rgds
Full Log Contents:
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=== Setup logging started: 2014-09-24 20:38:00 ===
Running file: "C:\Users\AXSERV~1\AppData\Local\Temp\2\AxSetup\AxSetup.exe" RelatedFilesDir="C:\$ Dyn AX_XXXXXX\AX 2009 [5.0.593.0 July 2008] UNZIPPED"
AxSetup version number: 5.0.593.0
Microsoft Windows NT 6.1.7601 Service Pack 1 (64 bit)
MXPMAMXAX001
CORPORATIVO\AXservice
Interactive: True
RelatedFilesDir=C:\$ Dyn AX_XXXXXX\AX 2009 [5.0.593.0 July 2008] UNZIPPED
Property RelatedFilesDir set to: 'C:\$ Dyn AX_XXXXXX\AX 2009 [5.0.593.0 July 2008] UNZIPPED\'
Property SetupLanguage set to: 'EN'
=== Loading parameters from the command line or a parameter file ===
Initializing log file: C:\ProgramData\Microsoft\Dynamics AX\Dynamics AX Setup Logs\2014-09-24 20-38-00\DynamicsSetupLog.txt
=== Starting evaluation of existing installation state ===
MSI file: Components64.msi Installed: False
MSI file: ClientHelp.msi Installed: False
 
=== Checking parameters ===
Property InstallPath set to: 'C:\Program Files\Microsoft Dynamics AX\50'
Property InstallPath32Bit set to: 'C:\Program Files (x86)\Microsoft Dynamics AX\50'
=== Starting UI phase ===
Property AcceptLicenseTerms set to: '1'
Property BypassWarnings set to: '0'
Property RunMode set to: 'Custom'
Property BypassWarnings set to: '0'
Property InstallDatabase set to: '1'
Property InstallDatabase set to: '0'
Property InstallDatabase set to: '1'
Property DbServerType set to: '0'
Property DbSqlServer set to: 'mxpmamxdbpro01'
Connected to SQL Server: 'mxpmamxdbpro01'
Property DbSqlDatabaseName set to: 'PMAM_LIVE'
Property BypassWarnings set to: '0'
Property BypassWarnings set to: '0'
Property RunMode set to: 'Custom'
Property BypassWarnings set to: '0'
Property DbServerType set to: '0'
Property DbSqlServer set to: 'MXPMAMXDBPRO01'
Connected to SQL Server: 'MXPMAMXDBPRO01'
Property DbSqlDatabaseName set to: 'PMAM_LIVE'
Connected to SQL Server: 'MXPMAMXDBPRO01'
Property DbSqlDatabaseName set to: 'PMAM_LIVE'
=== Starting execution phase ===
=== Setting up Database PMAM_LIVE ===
Database: 2
Connected to SQL Server: 'MXPMAMXDBPRO01'
Exception: System.InvalidOperationException
Message: ExecuteNonQuery requires an open and available Connection. The connection's current state is closed.
FullText: System.InvalidOperationException: ExecuteNonQuery requires an open and available Connection. The connection's current state is closed.
at System.Data.SqlClient.SqlConnection.GetOpenConnection(String method)
at System.Data.SqlClient.SqlConnection.ValidateConnectionForExecute(String method, SqlCommand command)
at System.Data.SqlClient.SqlCommand.ValidateCommand(String method, Boolean async)
at System.Data.SqlClient.SqlCommand.InternalExecuteNonQuery(DbAsyncResult result, String methodName, Boolean sendToPipe)
at System.Data.SqlClient.SqlCommand.ExecuteNonQuery()
at Microsoft.Dynamics.Setup.InstallSqlServer.Create()
at Microsoft.Dynamics.Setup.MainForm.DatabaseInstall()
at Microsoft.Dynamics.Setup.MainForm.s250Timer_Tick()
==== Setup encountered an unhandled exception and could not be completed. For details see the previous messages in the log. ===
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