For a local sql2k install, it should be fine and not fail on update. However, you *can* manually create it if you need to. You simply copy the 'database' directory from the bes4 cd to the sql machine and execute the 'createdb' command, changing any variables if needed be (for a new install you shouldnt need to).
If you reboot and login to the machine administrator account, can you load sql manager and view the databases? If you can, then create a new login on the sql server with the BESAdmin user. Run the createdb script to update the db (change the switch in the config file from create to migrate). Then assign the BESAdmin login dbo rights on the new database. Then run your upgrade/install again.
If the db upgrade fails, delete it and run createdb with 'create', then do a new install. I hope you have a list of users?
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BES Admin, sometime God.
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