If you are facing this error in moss or WSS:
The specified database has an incorrect collation. Rebuild the database with the Latin1_General_CI_AS_KS_WS collation or create a new database.
Please change collation in sql server 2005
1. Open Microsoft Sql ServerManagement studio
2. Right click on the database and select properties
3. Select “options” and select proper collation and click OK.
Now run the process in which this problem occurs and enjoy it.