SQL Server Connection Issue – Existing Connection Forcibly Closed by Remote Host

Well, that error code is:

SUS_E_NOT_APPLICABLE -- install is not needed because no updates are applicable

(source)

This happens when you're trying to install a patch for an application and the patch no longer applies to the application. For example, if the application is version 10 and the patch fixes version 9, the patch will fail with that error.

One possible fix is to uninstall and reinstall SQL Server. Also, you could check to see if you have any patches or fixes installed already. I know that Service Pack 1 is already out for SQL Server. If you have that installed, it could be causing this error (trying to add an old patch to a newer version of PowerShell).

In the comments you indicate that your SQL Service is running as the Network Service account.

http://msdn.microsoft.com/en-us/library/windows/desktop/ms684272(v=vs.85).aspx

The NetworkService account is a predefined local account used by the service control manager. This account is not recognized by the security subsystem, so you cannot specify its name in a call to the LookupAccountName function. It has minimum privileges on the local computer and acts as the computer on the network.

This is the default account for installations under Vista and Windows Server 2008. During installation this account was granted Full Control file system permissions to the SQL Server data directory as seen in the File System Permissions Granted to SQL Server Per-service SIDs or Local Windows Groups section of the following article.

http://msdn.microsoft.com/en-us/library/ms143504.aspx#Reviewing_ACLs

Since you have relocated some of your database file the SQL Server service account needs permissions to the new locations. In the comments @Marian provided instructions for granting Network Service the required permissions.

Right click the drive -> Properties -> Security -> Edit -> add the Network Service user -> give him full control. By default he hasn't. Or better, just create a specific folder and give him Full Control permissions there. And move the data files in that folder.

The advice to create a new folder and move the files there is excellent as well.

Any additional services that are running as the Network Service account will aslo have permissions to this folder. Ideally the SQL Services should each have their own separate account.

http://support.microsoft.com/kb/2160720

When choosing service accounts, consider the principle of least privilege. The service account should have exactly the privileges that it needs to do its job and no more privileges. You also need to consider account isolation; the service accounts should not only be different from one another, they should not be used by any other service on the same server. Do not grant additional permissions to the SQL Server service account or the service groups. Permissions will be granted through group membership or granted directly to a service SID, where a service SID is supported. For more details please refer to Books Online Topic Setting Up Windows Service Accounts