The original problem wasn't fixed. I needed to be 100% sure that security on the server was not compromised so I needed to do things that required a restart.
When I restart the database server it takes from 1 to 10 minutes for the databases to be accessible depending on how long you've had the forum. The oldest databases get "loaded" first. It just because there are so many. Unpredictable things happen like the login failure you experienced.
All you need to do is wait if you see that error. Similarly if setup.asp is in the browser address bar it means the same (wait a few minutes).
I'm posting all the info here as I need to restart or do stuff. At the moment I'm running a checking program on the server to see if everything is ok. ECUI seem to be fairly confident and I am too (just a little cautious). Things may be a little slower over the next day or two but it will improve if everything checks out.