SQL Express 2008 R2 Error:15209 - An error occurred during encryption

Question

I am trying to install SQL Server Express 2008 R2 but it keeps failing .
The computer is Windows 7 x64, all the latest service packs and updates installed. 
The application is by Greatland, called Yearli (formerly called WinFiler). 
Last year’s WinFiler, which was installed on this PC, used SQL 2008 Express (x86). 
This year’s version is using R2 and attempted to install a new database. 
I have since uninstalled last year’s database.
When I run the Yearli install, it first attempts to install SQL Express 2008 R2, but the install fails with this error at the end of ERRORLOG:
Error: 15209, Severity: 16, State: 1. "An error occurred during encryption."
I have been researching this for days.  What I have done so far, based on MSKB and other user posts, is the following:
Changed the account for the SQL service from Local System to NETWORK SERVICE. 
Add NETWORK SERVICE to the “Protect” folder with Full permission added.
Neither of these have worked.  SQL appears to be installed, but the service will not start.
In the Windows System log I get this message:
The SQL Server (WFP_SS8E) service terminated with service-specific error The specified resource name cannot be found in the image file..
In the Windows Application log I get this message:
FileMgr::StartLogFiles: Operating system error 2(The system cannot find the file specified.) occurred while creating or opening file 'e:\sql10_main_t.obj.x86fre\sql\mkmastr\databases\objfre\i386\MSDBLog.ldf'. Diagnose and correct the operating system error,
and retry the operation.
The App log error is interesting because there is no E: drive on the system.
SFC /Scannow came up clean.
I don’t have any other ideas, so if anyone else does, I’d appreciate it.

Answer 1

SQL appears to be installed, but the service will not start.
In the Windows System log I get this message:
The SQL Server (WFP_SS8E) service terminated with service-specific error The specified resource name cannot be found in the image file..
In the Windows Application log I get this message:
FileMgr::StartLogFiles: Operating system error 2(The system cannot find the file specified.) occurred while creating or opening file 'e:\sql10_main_t.obj.x86fre\sql\mkmastr\databases\objfre\i386\MSDBLog.ldf'. Diagnose and correct the operating system error,
and retry the operation.
Hi dfosbenner,
According to your description, SQL Server fails to start and you get the error message (Operating system error 2……) in Windows Application log. To work around this issue, you might have to change the path of the files by running the following scripts from
the command prompt. The example is to put MSDB files in C drive, you can change the path of the files to other drives.
NET START MSSQL$SQLEXPRESS /f /T3608
SQLCMD -S .\SQLEXPRESS
ALTER DATABASE msdb MODIFY FILE ( NAME = MSDBData, FILENAME = 'C:\MSDBData.mdf');
ALTER DATABASE msdb MODIFY FILE ( NAME = MSDBLog, FILENAME = 'C:\MSDBLog.ldf');
go
exit;
NET STOP MSSQL$SQLEXPRESS
For more details, please review the following thread.
https://social.msdn.microsoft.com/Forums/sqlserver/en-US/54bbcac3-41c5-4a5d-a4f6-2669e538dc82/sqlserver-2008-express-install-error?forum=sqlexpress
Thanks,
Lydia Zhang