Despite of having all the prerequisites the following issues is noticed:-
1. The Application pool would stop for the Quest Notes Migrator for SharePoint (NMSP) web service.
2. Installing the NMSP web service would install but would not be able to browse to the ImportSession.svc site and would prompt for credentials three times and would give an unauthorized error message.
3. Event viewer logs would point to Login failures even though the password entered were incorrect.
The wrong version of .Net 2.0 framework was installed.
Since the machineis a 64 bit machine the SQL Server 2005is also installed on the same server, the .NET 2.0 Framework for the 64 bit must be installed.
Uninstall the32 bit version of .NET 2.0 Framework and reinstall the 64 bit version for .NET 2.0 Framework.
The .NET 2.0 64 bit edition can be downloaded from the following location:-
http://www.microsoft.com/downloads/details.aspx?FamilyId=b44a0000-acf8-4fa1-affb-40e78d788b00&DisplayLang=en