After having muliple problems with using MSSQL with Moodle I finally decided to ditch the whole thing and go with MySQL like Moodle wants. However, I'm finding this to be even more problematic!
I have installed MySQL and verified it is working correctly with phpMyAdmin. I run the install.php and everything runs fine, it creates the config.php and I can see the settings in the file. However, when clicking continue after the creation of the config.php file, Moodle completely falls over when it tries to go to index.php with a 500 Internal Server Error. When you turn off the friendly error pages in IE, all you get is a blank page. If you try and run install.php again, it will not run until you have deleted the config.php file.
Any suggestions?