What is the Microsoft Loopback adapter and why do I need it for SQL Server?

A. SQL Server is dependent on network functionality - even for the set-up routines. Specifically it needs to use named-pipe/mailslot functionality on NT machines. These usually require a network card to be present. If you don't have a network card then go to control panel/networks, choose add adapter and then add the Microsoft loopback adapter - which is just a dummy driver, no hardware involved. This needs to have working network protocol(s) bound to it. Let whichever protocols you have use default parameters, EXCEPT for tcp-ip. If you are using this then do NOT specify dhcp assigned address, use 192.168.1.1 as the IP address and 255.255.255.0 as the subnet mask. This is a standard RFC1918 non-routed IP address so shouldn't clash with any dial-up address you may be given by an ISP.

Related: How can I install the Microsoft Loopback adapter in Windows XP?

If the server service does not start after installing the loopback adapter and you get the following message in the event log, then you need to re-install your *NT* service pack to synchronise your NT networking files. "The server service terminated with the following error: Not enough server storage is available to process this command"

One way of testing that the named-pipes functionality works is to run the makepipe and readpipe utilities that come with SQL Server. Run makepipe in one command window. Then run readpipe in another. If these work (i.e. the readpipe connects to makepipe and closes it down) then it is a good indication that networking functionality is ok.

For Win9x machines you don't need a loopback adapter to install but you do need to have the "MS Network Family Driver" installed and the default network client.

Related: How do i install the Loopback adapter in Windows 2000?