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Note that SQL7 SP3 comes in two parts, one for database components, one for OLAP.
Install the OLAP part - but if OLAP wasn't already installed, you can not apply that part of the SQL7 SP3.
It's an optional component - one that doesn't get installed by default.
NOTE: During the SP3 upgrade procedure, it strongly warns the user to change default authentication from mixed (with sa and no password) to NT Authentication. The default is changing authentication to NT authentication.
Go into SQL Enterprise Manager, and right-click the MSPress database, changes the logon scheme from NT authentication to SQL authentication (with the original parameters used - likely sa and no password)
You not only need to reselect the unadvised mixed-mode during setup, but you must check the 'no password' checkbox - despite it warning you against that for security reasons.
NT authentication was starting to be used as opposed to mixed mode (sa and no password) which would mean that the setup, which likely was used with the defaults (mixed mode) no longer worked as the database logon scheme was changed.