Yesterday I've been installing SQL Express on a VirtualPC with Polish Windows XP. When setup reached the point when it tried to start the service I got following error:
The SQL Server service failed to start. For more information, see the SQL
Server Books Online topics, "How to: View SQL Server 2005 Setup Log Files"
and "Starting SQL Server Manually."
and with alert from NetLogon service in event log that the “This computer is part of a workgroup and not a domain and in such configuration the NetLogon service can't be started” (translated from Polish).
It occurs that by default setup configures the service to use the Local Service account but uses the localized name (for me it was “Usluga Lokalna“). This might force the system to lookup this name in the domain controller which requires the Netlogon service to start but will fill when computer does not belong to a domain. This problem was reported on MS support newsgroups for other non-English OS's and it was suggested that it can be workaround by changing the account for the service to Local System. And indeed it fixed the problem for me.