WORKAROUND:
sp_dropserver 'old_name'
go
sp_addserver 'new_name', 'local'
go
Note: After you run the sp_addserver stored procedure, you must restart the SQL Server service for the change to @@SERVERNAME to take effect.
SQL Server Books Online also states the following: You do not have to run Setup again to reset the computer name.
The preceding statement is only true if it is not a virtual server. To rename a virtual server you DO have to uninstall, and then reinstall the virtual server.
Note: Machine name and SQL Server name must be the same. If it is different, make the necessary changes in your DNS Server. Or make note in host file located in "C:\WINDOWS\system32\drivers\etc"