Have you tried ?
http://www.eventid.net/display.asp?eventid=18456&eventno=8175&source=MSSQLSERVER&phase=1
Anonymous (Last update 10/22/2008):
After migrating WSUS 3.0 SP1 database form Internal Database to SQL 2005 instance installed on the same server you can get the following error: Login failed for user "NT AUTHORITY\NETWORK SERVICE". [CLIENT: ]. This problem may appear because the NT AUTHORITY\NETWORK SERVICE account does not have login permissions to master database in the SQL 2005 instance. Add the NT AUTHORITY\NETWORK SERVICE account to the master database permissions list, restart the SQL server, restart the IIS service, and then restart the Update Services service.