Error 25070 on setup

Source: Microsoft Support

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When installing an upgrade patch, or running change mode setup from the Control Panel for MIIS or ILM or IIFP, the installation process stops and returns the error:
Error 25070. Error connecting to database. MicrosoftIdentityIntegrationServer.
<hr=0x8000405>

This error occurs when the setup process cannot connect to the MIIS database.

To resolve this problem, you must be able to establish connectivity to the MIIS database. A good way of testing this is to create a UDL file (see http://support.microsoft.com/kb/244659 (http://support.microsoft.com/kb/244659)  for details)
The Provider should be the Microsoft OLE DB Provider for SQL Server.
The data for the Server and database fields can be found in the following registry key:
       HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Services\miiserver\Parameters

If the database is local and the default SQL instance then the server field in the UDL can be left empty.

In one case, this error occured because the user had changed the SQL port after installing the database, but anything that is preventing SQL connectivity can also cause this error.

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